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Treasurys were mixed in early trade Monday, with the 10-year yield down slightly from its level late Friday afternoon, as traders turned their attention to economic data, including a crucial August jobs report due at the end of the week.
What are yields doing?
-
The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.292%
was at 1.305%, down slightly from 1.311% at 3 p.m. Eastern on Friday. Yields and debt prices move in opposite directions. -
The 2-year note
TMUBMUSD02Y,
0.211%
yielded 0.215%, unchanged from the end of last week. -
The yield on the 30-year Treasury bond
TMUBMUSD30Y,
1.899%
was at 1.919%, up from 1.917% late Friday.
What’s driving the market?
The yield on the 10-year note saw its biggest weekly rise last week since June, rising 5.2 basis points, but pulled back on Friday after Federal Reserve Chairman Jerome Powell delivered remarks at the Kansas City Fed’s virtual Jackson Hole event.
Powell said he was in favor of beginning to scale back the Fed’s monthly asset purchases before the end of the year, but was vague about the timetable. He also emphasized that the start of tapering shouldn’t be read as a signal about the timing of rate increases.
Analysts said the remarks underline the importance of near-term economic data in determining when tapering is likely to begin, ensuring a sharp focus on Friday’s August jobs report.
The economic calendar for Monday is light, featuring July pending home sales at 10 a.m. Eastern.
Ida was downgraded from a hurricane to a tropical storm as its top winds slowed over Mississippi on Monday, a day after making landfall on the Gulf Coast with winds of 150 miles an hour, tying it for the fifth strongest hurricane to hit the U.S. mainland.
The storm sent gasoline futures jumping as it forced the closure of Gulf Coast refineries and the shutdown of a key pipeline that transports fuel to the Southeast. The refinery shutdowns weighed on oil futures, offsetting the near-total shutdown of offshore drilling activity for oil and natural gas in the region.
What are analysts saying?
“Given Powell’s speech, Friday’s jobs report could well determine 1) when tapering starts and 2) how quickly it occurs, given it’s the last jobs report before the Sept. 22 Fed meeting,” wrote Tom Essaye, founder of Sevens Report Research, in a note.
“So, that makes Friday’s jobs report the most important one in years, frankly speaking and…the bottom line is that the jobs report has to be Goldilocks enough that it doesn’t cause the Fed to accelerate tapering,” he said.
