U.S. Treasury yields have been on the rise for a third consecutive day as traders anticipate Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium. The rise in yields is influenced by stronger-than-expected economic data, including a higher-than-forecast producer price index.
Markets are looking for signals from Powell’s speech regarding the Federal Reserve’s next move on interest rates. While many traders are betting on a quarter-point rate cut at the September meeting, some are even speculating on a larger 50-basis-point reduction. However, the market remains cautious after Powell’s 2022 speech, where he warned of economic pain while emphasizing inflation control.
US Treasuries slipped for a third day ahead of a speech by Jerome Powell that traders will monitor for signals on whether the Federal Reserve is poised to cut interest rates.
The benchmark 10-year yield rose two basis points to 4.34%, extending a move that began on Thursday when wholesale inflation jumped the most in three years
Gennadiy Goldberg, head of US rates strategy at TD Securities, says “The big risk for markets is if he sounds very non-committal” regarding Powell’s speech, and notes that markets are trading as if a rate cut is secured.
US Treasuries slipped
US Treasuries slipped for a third day ahead of a speech by Jerome Powell later this week that traders will monitor for signals on whether the Federal Reserve is poised to cut interest rates.
The benchmark 10-year yield rose two basis points to 4.34%, extending a move that began on Thursday when wholesale inflation jumped the most in three years.
Jump In The UK
In a session of below-average trading volumes, reaction was largely muted as President Donald Trump met with Ukrainian leader Volodymyr Zelenskiy and European leaders. The dollar held gains against a basket of peers and Treasury yields were steady at one to two basis points higher across tenors, tracking an earlier.
Mixed US economic data
After weeks of mixed US economic data, investors are zeroing in on Powell’s appearance at the Jackson Hole, Wyoming, Fed symposium. The Fed’s chair is set to speak on Friday, with traders looking for hints of a dovish tilt to solidify bets that the central bank will move borrowing costs lower by at least a quarter point in September.
The big risk for markets
“The big risk for markets is if he sounds very non-committal,” Gennadiy Goldberg, head of US rates strategy at TD Securities, told Bloomberg Surveillance Monday. “If he comes in and pushes back on this market pricing and says, ‘Why do we need to cut at all?’ That’s really when markets will start to get upset because right now markets are trading as if that cut is secured.”