US Treasury yields have edged higher for the third consecutive day as traders anticipate a speech by Federal Reserve Chair Jerome Powell later this week. The market is keenly focused on any indications regarding potential interest rate cuts by the Fed. The benchmark 10-year yield increased by two basis points to 4.34 per cent, continuing a trend that began on Thursday following a significant jump in wholesale inflation.
Trading volumes were subdued during the session, with muted market reaction as President Donald Trump engaged with Ukrainian President Volodymyr Zelensky and European leaders. The US dollar maintained its gains against a basket of currencies. Treasury yields remained relatively stable, increasing by one to two basis points across various tenors, mirroring an earlier rise in the UK.
Following weeks of mixed economic data from the US, investors are now concentrating on Powell’s upcoming appearance at the Federal Reserve’s symposium in Jackson Hole, Wyoming. Powell is scheduled to speak on Friday, and traders are hoping for dovish signals that would solidify expectations of a reduction in borrowing costs by at least a quarter of a percentage point in September.
According to Gennadiy Goldberg, head of US rates strategy at TD Securities, the primary risk for markets lies in Powell adopting a non-committal stance. Interest-rate swaps currently indicate an approximate 80 per cent likelihood of the Fed cutting rates next month, with two cuts fully factored in by the end of the year.
