Treasury yields edge higher ahead of Powell's Jackson Hole speech

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Last edited Fri Aug 25, 2023, 08:09 AM - Edit history (1)

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Treasury yields edge higher ahead of Powell’s Jackson Hole speech

PUBLISHED FRI, AUG 25 2023 • 6:30 AM EDT | UPDATED 19 MIN AGO

Elliot Smith
@ELLIOTSMITHCNBC

U.S. Treasury yields were slightly higher on Friday, as traders await Federal Reserve Chairman Jerome Powell’s comments at the central bank’s Jackson Hole symposium. {snip} The yield on the benchmark 10-year Treasury note added more than 1 basis point to 4.247%, while the yield on the 30-year Treasury bond inched higher to 4.309%. Yields move inversely to prices.

Markets will be closely watching Powell’s comments for hints on the probable path of U.S. monetary policy. A recent surge took 10-year yields to their highest level since November 2007 earlier this week, as investors grappled with a surprisingly resilient U.S. economy and the possibility that inflation stays sticky, forcing the central bank to keep interest rates higher for longer.

Michael Arone, chief investment strategist at State Street SPDR, said that Powell should take a “victory lap” at the conclusion of the conference in Wyoming, with the Fed having so far succeeded in bringing inflation down significantly without tipping the economy into a recession.

“But the Fed likely isn’t convinced inflation has been beaten. As a result, there won’t be any curtain calls at Jackson Hole. Instead, investors should expect more tough talk from Chairman Powell that the Fed is more committed than ever to defeating inflation,” Arone said in a note on Thursday. ... “That work will be complicated by the Fed underestimating the impact of structural changes to the labor market that could keep inflation above 2% and put the soft landing in jeopardy.”

There are no major economic data releases or Treasury auctions scheduled for Friday.

How Jackson Hole Became an Economic Obsession

Investors and economists are watching the event this week closely. How did a remote Wyoming conference become so central?



[The moon sets between brown, craggy mountain peaks as day breaks.]

About 120 economists will gather this week at Jackson Hole in the Teton range, just north of Jackson, Wyo.Credit...David Stubbs for The New York Times

By Jeanna Smialek
Jeanna Smialek is in Jackson, Wyo., for the Federal Reserve Bank of Kansas City’s annual gathering.

Published Aug. 24, 2023
Updated Aug. 25, 2023, 8:54 a.m. ET

Filmmakers have Cannes. Billionaires have Davos. Economists? They have Jackson Hole. ... The world’s most exclusive economic get-together takes place this week in the valley at the base of the Teton mountains, in a lodge that is a scenic 34 miles from Jackson, Wyo.

Here, in a western-chic hotel that was donated to the national park that surrounds it by a member of the Rockefeller family, about 120 economists descend late each August to discuss a set of curated papers centered on a policy-relevant theme. Top officials from around the world can often be found gazing out the lobby’s floor-to-ceiling windows — likely hoping for a moose sighting — or debating the merits of a given inflation model over huckleberry cocktails.

This shindig, while a nerdy one, has become a key focus of Wall Street investors, academics and the press. The conference’s host, the Federal Reserve Bank of Kansas City, seems to know a thing or two about the laws of supply and demand: It invites way fewer people than would like to attend, which only serves to bid up its prestige. But even more critically, Jackson Hole tends to generate big news.

The most hotly anticipated event is a speech by the Fed chair that typically takes place on Friday morning and is often used as a chance for the central bank to send a signal about policy. Jerome H. Powell, the current Fed head, has made headlines with each and every one of his Jackson Hole speeches, which has investors waiting anxiously for this year’s. It is the only part of the closed-door conference that is broadcast to the public.

{snip}