US Treasury yields have edged lower, halting a three-day climb, as investors maintain expectations for interest rate cuts as early as next month. The shift comes ahead of a highly anticipated speech by Federal Reserve Chairman Jerome Powell. Yields decreased by one to four basis points across various tenors, with the benchmark 10-year yield dropping to 4.30 per cent. This reverses a selloff that began Thursday following a sharp increase in wholesale inflation.
Market participants are closely monitoring mixed economic indicators, including recent data suggesting a cooling labour market. These data points precede Powell’s address scheduled for Friday at the Fed’s annual symposium in Jackson Hole, Wyoming. Investors will scrutinise Powell’s statements for indications confirming expectations that the central bank will begin easing monetary policy at its mid-September meeting. Currently, interest-rate swaps suggest an approximately 80 per cent probability of such a move.
Analysts caution that the ultimate decision may depend on forthcoming economic data releases. Robert Sockin, senior global economist at Citigroup, noted the challenges facing Powell, citing the significant time gap and data releases between now and the September meeting. He emphasized the importance of upcoming labour market data in shaping the Fed’s outlook.
Earlier on Tuesday, Treasuries found support after S&P Global Ratings reaffirmed the US credit rating at AA+. The ratings agency indicated that revenue generated from President Donald Trump’s tariffs would help mitigate the fiscal impact of his tax cuts on the nation’s financial stability.
