WASHINGTON — Minneapolis Fed President Neel Kashkari stated that rising U.S. Treasury yields reflect global economic fundamentals and AI-driven investment optimism rather than financial instability. He made the remarks during an interview on CBS's “Face the Nation,” which aired on August 23, 2026.

The 10-year Treasury yield was 4.7 percent at the time of the broadcast. This level is high relative to recent history but not compared to longer American historical trends, according to Kashkari. “Well, Margaret, if you look at the Treasury yields, yields are high, 4.7 percent, for example, on the 10-year Treasury,” he said.

“They're high relative to recent history. They're not high relative to more – longer American history.”

Kashkari noted that in the early 2000s, the 10-year and 30-year Treasuries were around these levels, while yields in the 1990s were meaningfully higher. He added that there is no sign of Treasury market dysfunction or breaking down in financial markets. Multiple factors influence these yields, including inflation outlooks, AI investment, government borrowing, and economic growth.

The discussion occurred as the U.S. moved to raise tariffs on Canadian goods including lumber, steel, and aluminum. Investor Mohamed El-Erian characterized the situation differently in a published report. “There's a breathtaking leap in the cost of borrowing. If it persists, it could mark the beginning of a structural economic shift more enduring and more globally consequential than most previous episodes of market volatility,” El-Erian wrote.

Kashkari acknowledged El-Erian's observation that these moves are happening globally. He explained that the stock market has been bullish due to excitement about AI and prospects for productivity growth. “A more optimistic take on these market moves is that the bond market is catching up to the stock market, and the bond market is seeing a higher growth trajectory,” he said. He clarified that he is not endorsing this view but noted it is one possible interpretation.

Kashkari emphasized that managing the Treasury debt market is the responsibility of the Treasury Department, not the Federal Reserve. “Well, I'm going to leave it to the treasury secretary to manage the Treasury debt market. That's the job of the Treasury Department,” he said. The Fed's role remains focused on bringing inflation back down to 2 percent.

Regarding the national debt, Kashkari pointed to forecasts from the Congressional Budget Office. He stated that many Fed leaders have long viewed the debt trajectory as unsustainable. “I think, ultimately, it's up to our fiscal actors. That's the Treasury and the executive branch working with Congress to design a fiscal package that can change that and put it on a sustainable path,” he said.

He affirmed that he and his colleagues are committed to achieving the Fed's dual mandate goals regardless of fiscal decisions.