BOND REPORT: Treasury Yields Tick Higher As Investors Settle In For Jackson Hole

By Sunny Oh Features Dow Jones Newswires

ECB's Draghi and Fed's Yellen will speak at the Wyoming symposium

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Treasury yields rose slightly on Thursday as investors handled a raft of economic data before the much-awaited central banker get-together at Jackson Hole, Wyo., where European Central Bank President Mario Draghi and Fed Chairwoman Janet Yellen are slated to speak.

The 10-year Treasury yield rose 1.7 basis point to 2.183%. The yield for the 2-year note was mostly unchanged at 1.313%, while the 30-year bond's yield edged higher by 1.5 basis point to 2.762%. Bond prices move in the opposite direction of yields.

Yields held onto their climb in choppy trade after a mixed set of data. Claims on unemployment benefits crawled higher by 2,000 to 234,000 for the week ending Aug. 19 (http://www.marketwatch.com/story/us-jobless-claims-inch-up-from-six-month-low-2017-08-24), but in the more stable four-week gauge, fell 2,000 to 238,000. On the back of a weaker-than-expected new home sales (http://www.marketwatch.com/story/new-home-sales-skid-to-7-month-low-in-july-2017-08-23) number for July, existing-home sales fell to 5.44 million (http://www.marketwatch.com/story/existing-home-sales-tumble-to-2017-low-as-supply-crunch-bites-2017-08-24), their lowest level in the year. Investors eye existing sales figures more closely as they are a larger and more reliable gauge of the housing market's health.

Aaron Kohli, a fixed-income strategist at BMO Capital Markets, said the existing-home sales data should command attention as it makes up 34% of the basket of goods tracked to calculate the monthly consumer price inflation number.

"We're watching for any sign of weakness in shelter costs, which have been responsible for holding up CPI in the last few months even as other elements weakened," he said.

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See: Existing-home sales tumble to 2017 low as supply crunch bites (http://www.marketwatch.com/story/existing-home-sales-tumble-to-2017-low-as-supply-crunch-bites-2017-08-24)

The ins-and-outs of inflation have come back into focus as central bankers deal with the puzzling absence of price growth amid a global economic recovery. All 45 countries monitored by the Organization for Economic Cooperation and Development are set to grow this year, a once-in-a-decade lock-step move, according to the Wall Street Journal (https://www.wsj.com/articles/global-economies-grow-in-sync-1503507503). Yet inflation in the G-20, a group of the world's largest economies, slipped to 2%, its lowest level in close to eight years.

It's why market participants will watch the reports coming out of the Kansas Fed's Jackson Hole Economic Symposium, where Draghi and Yellen will give speeches, for further clarification on the inflation outlook.

"For the U.S., it's a more curious case [than Europe]. It's hard to see much slack out there and not more wage pressure than it has. No one really knows why inflation is low there," said Luke Bartholomew, fixed-income strategist for Aberdeen Asset Management.

He referred to the perplexing trend of labor markets reaching their tightest levels in 16 years at the same time that U.S. core inflation has posted several months of sub-2% readings.

Market participants also want details on how Draghi intends to wind down the ECB's 60 billion euro ($70.8 billion) monthly asset-purchasing program.

But the likelihood of Draghi using Jackson Hole to announce less accommodation has shrunk markedly. Reuters reported (https://www.reuters.com/article/global-forex-draghi-idUSL8N1L21QQ)that he did not intend to use the conference to signal a major policy move as he would want to avoid strengthening the euro, which makes it difficult for policymakers to shift away from monetary easing.

Also read: Here's what investors will be watching when Draghi, Yellen speak at Jackson Hole (http://www.marketwatch.com/story/heres-what-investors-will-be-watching-when-draghi-yellen-speak-at-jackson-hole-2017-08-22)

(END) Dow Jones Newswires

August 24, 2017 12:57 ET (16:57 GMT)