Short-term Treasury yields have risen dramatically since Yellen signaled that the central bank is on track to raise rates this year. And according to one trader, even higher rates could be ahead this summer.
In a speech in Providence, Rhode Island, on Friday, the Fed chief said that if the economy continues to improve, boosting the fed funds target rate would "be appropriate."
However, Yellen hedged a little by saying, "To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term."
That was enough to send the yield on the U.S. Treasury's two-year note above 0.6 percent. It rose as high as 0.64 percent Tuesday morning before retreating.