The Federal Reserve's long-awaited rate hikes are unlikely to rescue the beaten-down Treasury market.

Long-dated U.S. government bonds, as measured by the iShares 20+ Year Treasury Bond exchange-traded fund, have generated 4.4% in losses this year on a total-return basis. Much of the damage was felt over the summer.

Inflation is a minor factor behind the U.S. bond rout. Solid economic growth, mountain of national debt, and higher interest rate forecasts are the primary drivers-meaning that even if the Fed wins its war on inflation, yields are likely to remain high.

Consider this: The 10-year breakeven rate, which measures future inflation expectations, has only risen 0.09 percentage points this year through Wednesday, even as the 10-year Treasury yield has risen nearly a full percentage point to 5.02%, a 19-year high. Most of the increase has been driven by a rise in "real yields," or the non-inflation-sensitive component.

The good news is that this means investors believe inflation is likely to get under control over the long-term. But this also means that future Fed hikes, even if they bring down inflation, are unlikely to mitigate the rise in long-term yields.

Had the Fed not acted on Wednesday, "markets likely would have begun baking in higher inflation assumptions, leading to even higher yields than those we've seen of late," writes Matthew Palazzolo, senior investment strategist at Bernstein Private Wealth Management.

Rates are being driven by "faster growth rather than higher inflation expectations, with artificial intelligence contributing to that growth outlook." he adds. "As a result, we do not expect today's Fed actions to either accelerate or quell that momentum."

In other words, Fed chair Kevin Warsh has delivered on his promises to take action to bring down inflation. But the bond market has bigger problems.

In addition to increased growth expectations, elevated government debt and growing corporate debt are driving up yields. Financially sound corporations have issued 18% of their debt in the 10-year-plus sector this year as opposed to 12% in 2025, according to JPMorgan, adding to the pressure on longer-term rates.

Given this backdrop, yields might not fall meaningfully below recent highs unless and until investors become much more concerned about overall economic growth-or suddenly real political willingness to control the debt trajectory emerges.

Treasury Secretary Scott Bessent teased a "fiscal consolidation" plan during a CNBC interview on Aug. 20 and in testimony before lawmakers on Tuesday. But one is yet to arrive, and the market needs to believe in its efficacy.

On Thursday, as investors digest the first Fed rate increase since 2023, Treasury yields are down across the board. Still, short-term yields have risen since their pre-Fed-decision levels, while 30-yields are slightly lower.