Odaily Planet Daily reported: In July, the U.S. manufacturing PMI rose to 55.6, the highest level since 2022. Both production and employment rebounded. However, strong demand and inflation concerns driven by geopolitical factors have caused turmoil in the bond market, and Bank of America warned that the Federal Reserve is facing a test of credibility. The sizzling performance of the manufacturing sector, together with the inflation threats stemming from geopolitical tensions, has pushed the U.S. Treasury market into intense turbulence. In the long term, U.S. Treasuries recently saw a ferocious sell-off, and yields briefly surged to their highest level in nearly 20 years.

Bank of America’s U.S. rates strategist Mark Cabana said the extreme volatility in the bond market is a “textbook-style inflation credibility shock.”

Kaban pointed out that the core reason for market turmoil is not the data itself, but the Fed’s lack of clarity in policy communication. He specifically referenced remarks by Federal Reserve Chair Kevin Warsh at a recent press conference, saying Warsh failed to clearly explain how the Fed will achieve its 2% inflation target.

“Maintaining a firm inflation target is one thing, but if you don’t spell out a specific path for the market, investors won’t buy it.” In an interview with Bloomberg Television, Kaban said bluntly, “The bond market can’t be fooled—it sees through every appearance.” (Jin Shi)