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U.S. Treasury yields were slightly higher on Monday as the pace of the debt market selloff eased ahead of the usual rejigging of bond portfolios at the end of August.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.722% was up 0.8 basis point to 0.736%, while the 2-year note rate TMUBMUSD02Y, 0.125% edged 0.4 basis point down to 0.131%. The 30-year bond yield TMUBMUSD30Y, 1.490% rose 1.2 basis points to 1.520%. Bond prices move inversely to yields.
What’s driving Treasurys?
The momentum from last week’s selloff in Treasurys is cooling as market participants look to buy bonds on the cheap. Before the end of the month, investors will aim to top up on the amount of bonds they hold to keep the maturities of their overall portfolios in line with those of their competing benchmark.
With no major economic data on the docket, investors will turn their attention to speeches by Federal Reserve Vice Chairman Richard Clarida and Atlanta Fed President Raphael Bostic. Investors are still looking for clarity on what the Fed’s historic shift to an average inflation target of 2% will mean for monetary policy.
See: The Fed’s new policy may have just ushered in a new era of uncertainty on Wall Street
Expectations around the policy shift helped to weigh on the prices of long-dated Treasurys last week, the part of the yield curve most vulnerable to the corrosive influence of inflation.
What did market participants’ say?
“The Fed speak following the policy change coming out of Jackson Hole has been uneven in message,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.
“At some point, the Fed will clarify with more formal forward guidance on both employment and inflation,” he said.
