BOND REPORT: Treasury Yields Steady As Investors Await Yellen And Draghi

By Sunny Oh Features Dow Jones Newswires

Fed Chairwoman Janet Yellen will speak on financial stability at 10 a.m. Eastern

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Treasury yields were mostly unchanged in early trade Friday as investors awaited speeches from Fed Chairwoman Janet Yellen and European Central Bank President Mario Draghi at the Kansas City Federal Reserve's symposium in Jackson Hole, Wyo.

The 10-year Treasury yield was flat at 2.197%, while the 30-year bond yield was unchanged at 2.772%. The yield for the 2-year note edged higher 0.4 basis point to 1.338%. Bond prices move inversely to yields.

Analysts said Draghi's comments were likely to garner more attention than Yellen's, even if he tries to avoid giving a speech that could be interpreted as hawkish and a prelude to a tapering of ECB bond purchases. As the ECB runs out of sovereign bonds to buy, analysts feel Draghi has no choice but to begin signaling an end to the use of quantitative easing. Last time round, his speech at Sintra two months back caused the euro to surge (http://www.marketwatch.com/story/what-happened-to-mario-draghis-silver-tongue-2017-06-28), hamstringing the ECB's efforts to stimulate a broad economic recovery in the eurozone.

See:Jackson Hole live blog: Yellen, Draghi on tap (http://blogs.marketwatch.com/capitolreport/2017/08/25/jackson-hole-fed-conference-live-blog-yellen-draghi-on-tap/)

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)

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And though Yellen is not expected to offer her thoughts on the Fed's current policy path at 10 a.m. Eastern, some have suggested the speech could be sizing up to become a historic one, as it could be the last time she will attend the Jackson Hole symposium as arguably the most powerful central banker. Trump's chief economic adviser Gary Cohn has been touted as the leading candidate to succeed Yellen (http://www.marketwatch.com/story/cohn-reportedly-front-runner-to-replace-yellen-as-fed-chief-2017-07-11) when her current term office ends in 2017.

Also see:Fearful of awakening market bears, Yellen and Draghi to tread softly at Jackson Hole (http://www.marketwatch.com/story/fearful-of-awakening-market-bears-yellen-and-draghi-to-tread-softly-at-jackson-hole-2017-08-24)

Yet only a week ago, speculation was rife that Cohn would leave the White House following the controversy and violence in Washington.

He fought back on those reports, saying he had no interest leaving his position as Trump's chief economic adviser, in an interview with the Financial Times released on Friday (https://www.ft.com/content/0169006e-8946-11e7-bf50-e1c239b45787). Cohn said he and his team have made headway on more specific details on their policy proposal, throwing a few bones to investors betting on major tax reform.

Read:Do stock-market investors really care about Gary Cohn and the Trump agenda? (http://www.marketwatch.com/story/do-stock-market-investors-really-care-about-gary-cohn-and-the-trump-agenda-2017-08-22)

The remarks come as White House officials and congressional leaders were finding pockets of consensus that could help make progress on the tax plan, according to Politico (http://www.politico.com/story/2017/08/22/trumps-team-and-lawmakers-making-strides-on-tax-reform-plan-241873).

Treasury yields ticked higher before retreating in early trade after durable goods, a gauge of business investment, fell 6.8% in July. But the less volatile version of the economic indicator, which excludes transportation, rose 0.5% in July (http://www.marketwatch.com/story/orders-for-durable-goods-sink-68-in-july-the-most-in-nearly-three-years-2017-08-25). Bond yields tend to rise immediately following a bump in economic data on traders' concerns that growth could translate into inflation.

The sharpest drop in durable good orders in nearly three years was due to a large one-off batch of airplane orders for Boeing in June, making the July report more positive than the initial number had suggested. Once investors sift through the details, it would read as a "very encouraging report on capital spending," noted Jennifer Lee, senior economist at BMO Capital Markets.

She, however, added the caveat that protracted policy uncertainty in Washington could prompt U.S. corporations to delay making large investments.

(END) Dow Jones Newswires

August 25, 2017 09:30 ET (13:30 GMT)