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Bond Report: 10-Year U.S. Treasury Yield Hits New Month High

U.S. bond yields rose on Friday, with 10-year and 30-year Treasury yields rising for a third straight week, as traders assessed how high interest rates Federal Reserve officials might take to combat persistent inflation.

What happened
  • 2 One-year Treasury notes TMUBMUSD02Y, 3.238% rose 3.2 basis points to 3.265%, compared with 3.233% late Thursday. It was up less than 1 basis point for the week.
  • Yield of 10-year Treasury TMUBMUSD10Y, 2.973% rose 10.8 basis points to 2.987%, compared with 2.879% Thursday afternoon. That was the highest level since July 20 and the biggest one-day gain since Aug. 5, based on levels at 3 p.m., according to Dow Jones Market Data. It is up 13.9 basis points this week and 34.5 basis points over the past three weeks.
  • Yield of 30-year Treasury TMUBMUSD30Y, 3.214% rose 8.6 basis points to 3.225% from Thursday’s 3.139%. It was the highest level since July 8 and the largest one-day gain since August 11. It is up 10.8 basis points this week and 24.9 basis points over the past three weeks.
What is driving the market

With no major economic data out on Friday, investors focused on a speech by Richmond Fed President Thomas Barkin, who became the latest Fed official to comment on the likely path forward for central bank policy.

Barkin said the central bank will do everything it can to bring inflation back to target, even if it means risking a recession. The regional Fed president also said the path to containing inflation would not require a sharp drop in economic activity, according to Reuters.

Next week’s Jackson Hole Economic Symposium will provide an opportunity for Federal Reserve Chairman Jerome Powell to outline his thoughts on where interest rates might be headed.

See: Powell tells Jackson Hole that recession won’t stop Fed from fighting high inflation

A handful of Fed officials had mixed comments on Thursday. Leave investors unsure of where policymakers will move next. In particular, St. Louis Fed President James Bullard told the Wall Street Journal that he is inclined to support another 75 basis point rate hike in September. Meanwhile, his colleague at the San Francisco Fed, Mary Daly, told CNN International that the U.S. central bank is trying to strike a balance and doesn’t want to raise rates “too much” or “too much”.

Yields on the 10-year and 30-year U.S. Treasury notes rose this week, even after factoring in a small dip Thursday as investors tried to gauge the health of the economy.

U.S. economic data on Thursday showed the job market remained healthy, with manufacturing indicators in the Philadelphia area not as bad as Monday’s report in the New York area, even though the housing sector has been driven by rising mortgage rates And shaky.

In Europe, inflation data shows that prices continue to rise in developed countries. Producer prices in Germany surged 37% year-on-year in July to a record high, according to data released on Friday.

Analyst’s take

Raffi Boyadjian, chief investment analyst at XM, said: “Even the Fed seems to have a hard time understanding the data because Policy makers have doubts about the pace of future rate hikes.”

“Federal funds futures are now showing a slightly more than 75 bps chance of a 50 bps rate hike in September. But next week the Fed Those possibilities could change when officials hold their annual symposium in Jackson Hole, Wyoming, where Chairman Jerome Powell will deliver his first speech since the July FOMC meeting and since the weak CPI report. ‘s first speech.”



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