Fed's Warsh lays out forces driving up bond yields

Not on that list of factors? A direct worry about inflation or the Fed’s ability to get high price pressures back to the Fed’s 2% target. Also not on the list? Worries about the sustainability of U.S. deficits as the U.S. government debt level has cracked $40 trillion.

The rise in yields had heavily factored into market thinking on the outcome of the meeting, where officials voted unanimously to raise the central bank’s overnight target rate by a quarter percentage point to between 3.75% and 4%.

Markets had priced strongly for the prospect that the Fed would tighten monetary policy following comments Warsh made at the end of August at the Kansas City Fed's Jackson Hole, Wyoming research conference. Then, after saying little about monetary policy, Warsh said the Fed would act to ensure inflation would return to the 2% target.