Bond Report: Two-year Treasury yield holds above 5% before Powell speech


The yield on the 2-year Treasury held above 5% on Friday ahead of key comments from Federal Reserve Chair Jerome Powell.

What’s happening

  • The yield on the 2-year Treasury BX:TMUBMUSD02Y was 5.04%, up 2.3 basis points. Yields move in the opposite direction to prices. The 2-year security is particularly sensitive to Fed interest-rate expectations.
  • The yield on the 10-year Treasury BX:TMUBMUSD10Y was 4.25%, up 0.4 basis points.
  • The yield on the 30-year Treasury BX:TMUBMUSD30Y was 4.31%, up 0.1 basis points.

What’s driving markets

Powell’s speech at Jackson Hole, Wyo., at 10:05 a.m. Eastern, will be watched not just for clues on what he will say about possible Fed moves in the autumn but longer term.

Fed officials speaking on Thursday suggested more rate hikes could be in store, though likely not in September.

There’s some speculation that Powell could discuss the Fed’s so-called neutral, or r-star, rate, and whether that has moved higher.

“We think Powell’s remarks will emphasize a data-dependent, risk management approach. We also expect him to emphasize the Fed’s commitment to getting inflation to 2%. We do not think he will signal the end of the tightening cycle, nor do we think that he will make any grand pronouncements about a regime shift in interest rates,” said Alex Pelle, U.S. economist at Mizuho Securities.

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