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Treasury yields finished mixed on Friday, but were higher for the week, as traders turned to next week’s U.S. consumer price index report for August.
What happened
-
The yield on the 2-year Treasury
BX:TMUBMUSD02Y
rose 2.9 basis points to 4.982% from 4.953% on Thursday. For the week, it rose 11.6 basis points, according to 3 p.m. Eastern time figures from Dow Jones Market Data. It’s up 14 of the past 18 weeks. -
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was marginally lower at 4.257% versus Thursday’s 3 p.m. level of 4.260%. -
The yield on the 30-year Treasury
BX:TMUBMUSD30Y
slipped 2.2 basis points to 4.330% from 4.352% on Thursday. - The 10- and 30-year rates respectively rose by 8.4 basis points and 4.5 basis points this week, their largest weekly gains in three weeks.
What drove markets
Several Federal Reserve officials spoke on Thursday, leaving little doubt that the central bank won’t raise interest rates again in September. However, differences emerged on whether the central bank will still have to take rates higher in November.
New York Fed President John Williams sounded content with the current level of interest rates, but said he would be watching the data closely to make sure borrowing costs are high enough to keep inflation moving down.
Chicago Fed President Austan Goolsbee suggested the Fed is almost done raise rates. Dallas Fed President Lorie Logan said if the Fed skips a rate hike at its meeting in two weeks, that doesn’t imply policy makers will stop hiking for good.
There weren’t any major U.S. economic released on Friday. The consumer price index for August will be released on Wednesday.
What analysts are saying
“The trajectory of U.S. rates has been hotly debated as it presently appears that Powell has managed to engineer a soft landing and the probability of an economic recession has waned,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery. “It’s tempting to assume that the next stage in the Treasury market will be repricing to a new paradigm in which a balanced labor market and well-managed consumer price inflation will define the outlook — we’re certainly sympathetic to such an interpretation of the likely path of the real economy in the coming quarters.”
“Ultimately however, there remains sufficient evidence that the weight of the cumulative rate hikes is quickly catching up to the U.S. economy and optimism won’t be able to outrun the realities of a significantly tighter policy stance — both domestically and abroad,” they wrote in a note.
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