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Treasury yields hold steady ahead of Kevin Warsh Jackson Hole speech
The 10-year Treasury yield was at 4.69% and the probability of a Fed hike by December remained above 70% after hotter inflation data, with the dollar staying below 100.
US Treasury yields were largely flat in Friday trading as markets awaited Federal Reserve Chair Kevin Warsh’s address at Jackson Hole scheduled for 10 AM New York time, with traders seeking clearer signals on his outlook for inflation and the interest rate path.
The 30-year yield edged up 2 basis points to 5.21%, while the 10-year yield rose 2 basis points to 4.69% and the 2-year note yield was up less than 1 basis point to 4.234%. Longer-dated yields also drew support from hotter-than-expected US inflation data earlier this week, which reinforced expectations of a Fed rate increase before year-end.
According to the report, the odds of a hike by December remained above 70%, and Kansas City Fed President Jeffrey Schmid said current central bank rates are not restraining the economy enough to return inflation to the Fed’s 2% target. Separately, fears tied to a potential US debt crisis, following plans to double Treasury purchases of longer-term government debt, weakened the US dollar, which remained below 100 even as it was on track to finish the week slightly higher.
Market participants also see Warsh’s speech as potentially more consequential for foreign exchange, gold, and bond markets than for equities. The article cited data compiled by Bloomberg showing the S&P 500 has averaged a 0.4% gain in the week after Jackson Hole gatherings.
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