Waller's Speech Key to Stabilizing Long-Term Bond Yields

The US Treasury's efforts to suppress long-term bond yields have failed to produce lasting results. Secretary Bessent's plan to double long-term bond buybacks has only led to a brief respite, followed by a return to high yields.

As a result, the market is now shifting its focus to Federal Reserve Chairman Waller's speech at Jackson Hole, where he will provide crucial guidance on the inflation path. If his comments do not provide clear signals, the sell-off of long-term US Treasuries may intensify, potentially leading to a 5% yield on the 30-year bond.

Some market participants believe that Waller has the opportunity to reassure the market by characterizing potential inflationary pressures and providing clarity on the Federal Reserve's policy response function. Others, however, warn that if his comments do not provide new insights, it could exacerbate the long-end sell-off already seen.