U.S. Treasury yields climbed Wednesday as robust ADP payrolls and March retail sales erased hopes for near‑term rate cuts. The policy‑sensitive two-year note jumped four basis points to 3.76%, pulling the broader curve higher across maturities. Traders recalibrated expectations ahead of Federal Reserve Chair nominee Kevin Warsh’s Senate Banking Committee appearance.

The market backdrop features the first month of the U.S.–Iran conflict, where inflation stays above the Fed’s 2% target and growth appears resilient. Investors now price roughly a one‑in‑three probability of a rate cut this year, while the $31 trillion bond market has rebounded from March’s oil‑price shock. Ten‑year yields hovered near 4.25%.

In his prepared remarks, Warsh pledged to keep monetary policy “strictly independent” and signaled that, once oil prices settle near $75 a barrel, a second‑half‑year cut could be feasible. Portfolio manager Clayton Triick expects Warsh to deliver an upbeat economic outlook. With yields already elevated, the Treasury market will remain sensitive to any shift in the nominee’s tone.

For fixed‑income investors, the rally in yields compresses price appreciation potential and raises financing costs for corporations. Should Warsh’s testimony reassure markets about a steady policy path, the curve may stabilize around current levels. Any deviation toward aggressive easing would likely reignite the bond rally that began earlier this month.