Musalam: Bond market sell-off stems from government borrowing and AI financing needs, not from Fed credibility issues

St. Louis Fed President Musalim said that the selling in the US bond market was driven by the demand for government borrowing and artificial intelligence construction financing, rather than questioning the credibility of the Federal Reserve. Musalam pointed out that inflation expectations have been anchored and the credibility of the Federal Reserve has not been questioned. Musalam reiterated his hope that the Federal Reserve would raise interest rates at its July meeting to curb inflation, and believed that without raising rates, the likelihood of inflation falling back to the Fed's 2% target within 18 months would increase.