BOND REPORT: Treasury Yields Slightly Lower As Investors Gear Up For Jackson Hole
The Jackson Hole symposium begins from Aug. 24 and ends at Aug. 26
Treasury yields fell slightly as bond investors set up for the Kansas Federal Reserve's Jackson Hole symposium, a central banking get-together that could touch on the puzzling lack of inflation in a solid global economy and the need for the European Central Bank's extraordinary monetary stimulus in a recovering eurozone.
The benchmark 10-year note's yield ticked lower 1.1 basis point to 2.184%. The 2-year note's yield fel 1.6 basis point to 1.297%, while the yield for the 30-year bond ticked 0.6 basis point lower to 2.771%. Bond prices move in the opposite direction of yields.
In Europe, the yield for 10-year German government paper, known as the bund, was lower by 2.1 basis points to 0.396%. Investors look at German bonds as a bellwether for the eurozone economy.
Investors are setting up for the central bankers' symposium in Jackson Hole, Wyo. from Aug. 24 to Aug. 26 as Fed Chairwoman Janet Yellen and European Central Bank President Mario Draghi are expected to make an appearance. Earlier expectations coming into the conference was for a historic announcement signaling the end of the ECB's EUR60 billion ($70.87 billion) bond-buying by the end of the year. But reports from Reuters (https://www.reuters.com/article/us-ecb-policy-draghi-idUSKCN1AW0LF) hint Draghi wouldn't use the conference as a platform for a major policy shift have curbed enthusiasm.
All the same, with central banks like the Bank of Canada (http://www.marketwatch.com/story/bank-of-canada-makes-first-rate-hike-in-7-years-2017-07-12)and Bank of England (http://www.marketwatch.com/story/dovish-or-hawkish-bank-of-england-leaves-traders-confused-after-super-thursday-2017-08-03)looking to take their feet off the pedal, the central-banker symposium could be seen as a timely marker for the world economy crossing into a "transition period where monetary expansion ends," said James Meyer, chief investment officer for Tower Bridge Advisors.
Investors were also looking for some discussion on the outlook for inflation, which has refused to show up despite a global economic rebound. During the minutes from the Federal Open Market Committee meeting on July, senior central bankers held a deep discussion of the factors that could keep a lid on U.S. consumer prices (https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20160727.pdf).
"Central bankers have been surprised that despite synchronous economic growth around the world, inflation remains missing in action. While that creates both some confusion and concern, any worries are muted, given that growth is both sustained and improving," said Meyer.
In a day light with economic data, investors took a glance at the Chicago Fed's National Activity Index, a barometer of U.S. economic activity, fell to -0.01 from 0.16 in June, suggesting growth was neither above or below trend. (http://www.marketwatch.com/story/chicago-fed-national-economic-index-matches-multimonth-low-as-factories-hiring-a-drag-2017-06-26)The index is a weighted average of 85 economic indicators, designed so that zero represents trend growth and a three-month average below negative 0.70 suggests a recession has begun.
(END) Dow Jones Newswires
August 21, 2017 11:51 ET (15:51 GMT)