Bond yields remain relatively unchanged and are holding at their lowest level in a week as traders anticipate a speech by Federal Reserve Chair Jerome Powell on Friday.
Current Yield Figures
- The yield on the 2-year Treasury rose by 2.6 basis points to 4.976%. It is important to note that yields and prices move in opposite directions.
- The yield on the 10-year Treasury remained steady at 1.8 4.198%.
- The yield on the 30-year Treasury saw minimal movement, staying at 4.273%.
Benchmark Treasury yields continue to hover at their lowest levels for the past week following the release of surveys on Wednesday. These surveys indicated a sharper than expected slowdown in economic activity across developed nations, specifically in the United States and Europe.
The 10-year Treasury yield, which reached a near 16-year peak at 4.36% on Monday, experienced a decrease and began trading at 4.198% early on Thursday. This decrease occurred as traders eagerly awaited Powell’s upcoming speech.
Market indicators suggest that there is an 87% chance that the Federal Reserve will leave interest rates unchanged within a range of 5.25% to 5.50% after the next meeting on September 20. These predictions are based on the CME FedWatch tool.
Furthermore, market forecasts indicate a 40% probability of a 25 basis point rate hike to a range of 5.50% to 5.75% during the following meeting in November.
According to the 30-day Fed Funds futures, it is not anticipated that the central bank will reduce its Fed funds rate target to approximately 5% until June 2024.
U.S. Economic Updates for Thursday
On Thursday, there will be key updates on the U.S. economy, including the weekly initial jobless claims and durable goods orders for July. These updates are scheduled to be released at 8:30 a.m. Eastern time.
Treasury Auctions $8 Billion of 30-Year TIPS Paper
In addition, the Treasury will be conducting an auction of $8 billion worth of 30-year TIPS (Treasury Inflation-Protected Securities) paper on Thursday.
Various analysts have shared their perspectives on the upcoming events, particularly the speeches at the Jackson Hole symposium.
According to Patrick Munnelly, an analyst at TickMill Group, the central bank speeches, especially those by Fed Chair Powell and ECB President Lagarde, will be crucial. The symposium’s central theme of “Structural shifts in the global economy” is expected to provide valuable insights into the factors reshaping the world economy. Munnelly highlights the importance of understanding shifts in global trade dynamics and elevated levels of debt.
Munnelly also raises the possibility that these structural changes may result in interest rates stabilizing at higher levels than before the pandemic. This could have significant implications for monetary policy and global financial markets. The speeches at the symposium are eagerly anticipated to provide clarity on central banks’ perspectives and how they plan to navigate these shifts effectively.
Munnelly’s conclusions were shared in a note published on Thursday.