This post was originally published on this site
Treasury yields were little changed Friday morning, as the market steadied ahead of next week’s consumer price index report for August.
What’s happening
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
was 4.953%, unchanged from its 3 p.m. Eastern time level on Thursday. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 4.252%, down less than 1 basis point from 4.260% on Thursday. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
was 4.345%, down less than 1 basis point from 4.352% on Thursday.
What’s driving markets
Several Federal Reserve officials spoke on Thursday, leaving little doubt that the Fed won’t raise interest rates again in September. However, differences emerged on whether the central bank will still have to take rates higher at its November meeting.
New York Fed President John Williams sounded content with the current level of interest rates, but said he would be watching data closely to make sure the level of rates is high enough to keep inflation moving down.
Chicago Fed President Austan Goolsbee suggested the Fed is almost done raising interest rates. Dallas Fed President Lorie Logan said if the Fed skips a rate hike at its meeting in two weeks, that doesn’t imply policy makers will stop hiking for good.
There aren’t any major U.S. economic releases set for Friday. San Francisco Fed President Mary Daly is set to speak at 11 a.m. Eastern time. The consumer price index for August will be released on Wednesday.
What analysts are saying
“The trajectory of U.S. rates has been hotly debated as it presently appears that Powell has managed to engineer a soft landing and the probability of an economic recession has waned,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery. “It’s tempting to assume that the next stage in the Treasury market will be repricing to a new paradigm in which a balanced labor market and well-managed consumer price inflation will define the outlook – we’re certainly sympathetic to such an interpretation of the likely path of the real economy in the coming quarters.”
“Ultimately however, there remains sufficient evidence that the weight of the cumulative rate hikes is quickly catching up to the U.S. economy and optimism won’t be able to outrun the realities of a significantly tighter policy stance – both domestically and abroad,” they wrote in a note.
