Treasury Yields Slip as Markets Await Warsh's Jackson Hole Insights

US Treasury yields dipped on Thursday as investors waited for insights from Federal Reserve Chair Kevin Warsh's Jackson Hole remarks on interest rate decisions.

The bond market is trying to gauge a Fed stance that may balance its tough approach to inflation with reduced hints about future moves. Despite the dip, traders still see a 31% chance of a September rate hike and a 74% chance by December, with the 10-year yield hovering around 4.66% and the 2-year near 4.22%.

The uncertainty stems in part from policy signals not solely coming from the Fed, as the US Treasury's debt 'buybacks' also influence long-term yields. Treasury Secretary Scott Bessent announced last week that the department would at least double buybacks of longer-dated bonds, arguing that yields have risen more than economic fundamentals justify.

Bessent's plan could impact the 10-year yield, as reduced supply of long-duration bonds can lead to a lower term premium and thus pull down long-term yields. The gap between 2- and 10-year yields remains near 44 basis points.