Warsh's Jackson Hole Speech to Set Tone for US Bond Yields
US bond yields remained stable as investors awaited insights from Jackson Hole symposium. Fed Chair Kevin Warsh's upcoming speech is expected to shed light on interest rate policy amid persistent inflation concerns and expectations of further rate hikes before year-end.
The yield on the 30-year Treasury bond was flat at 5.185%, while the yield on the two-year Treasury note edged less than a basis point lower to 4.222%. Warsh is set to deliver his first major speech as Fed chair on Friday, which could offer fresh clues on the policy outlook.
Kansas City Fed President Jeffrey Schmid said the current level of central bank rates is not providing sufficient restraint to the economy, suggesting he still favours raising rates to bring inflation back to the Fed's 2% target. Global central banks continue to grapple with persistent inflationary pressures, and investors are pricing in a 74% chance that the Fed will raise interest rates by at least 25 basis points by December.
The combination of higher-than-expected inflation and resilient economic growth has boosted expectations of another Fed rate hike before the end of 2026. The US Treasury Department announced last week that it would at least double the size of its planned purchases of longer-term government debt, amid growing concerns over large US budget deficits and persistently above-target inflation.