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U.S. Treasury yields showed little direction in early Thursday trade as bond investors awaited the outcome of the Federal Reserve’s review of its monetary policy tools and goals.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.677% fell a basis point to 0.677%, while the 2-year note rate TMUBMUSD02Y, 0.140% down 0.9 basis point to 0.145%. The 30-year bond yield TMUBMUSD30Y, 1.405% stood at 1.405%. Bond prices move inversely to yields.
What’s driving Treasurys?
The Federal Reserve may announce the outcome of its review of its policy review at the virtual Jackson Hole central banker symposium Thursday in a speech by Fed chair Jerome Powell. The Fed is expected to signal its willingness to allow inflation to pop above 2% before looking to institute tighter financial conditions, in contrast with the past policy of preemptively raising rates when inflation neared 2%.
New claims for U.S. jobless benefits in the latest weekly period are expected to come in at a million, a decrease from the previous week but nonetheless a highly elevated number. A revision of the U.S.’s second-quarter GDP will also be published at the same time, followed by pending home sales for July at 10 a.m. ET.
A $48 billion 7-year note auction in the afternoon will close this week’s debt sales, which have seen better-than-expected demand.
What did market participants’ say?
“Confidence in what [Powell] is going to say is broad and nearly unanimous. The key point on inflation should be as priced in as any well-anticipated Fed event can be. If he says something even mildly surprising, look for a too-big reaction,” said Jim Vogel, an interest-rate strategist at FHN Financial.
