Treasury yields were little changed Wednesday morning as investors looked ahead to a busy schedule of speakers from the central bank.
- The yield on the 2-year Treasury note TMUBMUSD02Y, 4.475% held steady at 4.454% versus 4.469% on Tuesday. Tuesday’s level marked the highest for the 2-year rate since Nov. 29, based on 3 p.m. figures from Dow Jones Market Data.
- The 10-year Treasury note yield TMUBMUSD10Y, 3.686% slipped to 3.669% from 3.673% on Tuesday. Tuesday’s level was the highest for the 10-year rate since Jan. 5.
- The 30-year Treasury bond yield TMUBMUSD30Y, 3.746% was 3.713%, up slightly from 3.706% on Tuesday when the yield reached the highest since Jan. 10.
What’s driving the market?
Six Federal Reserve officials are scheduled to speak on Wednesday, starting with New York President John Williams, who said that a 5% to 5.25% peak fed funds rate is still a good goal and indicated that a stepdown to quarter-of-a-percentage point hikes like the one on Feb. 1 is an optimal approach.
Also set to appear today are Fed Gov. Lisa Cook, Vice Chair Michael Barr, Atlanta President Raphael Bostic, Minneapolis President Neel Kashkari, and Fed Gov. Christopher Waller.
In remarks on Tuesday, Powell said that the process of disinflation will probably be “bumpy” and that the January jobs report, which revealed a much stronger-than-expected 517,000 jobs bump, underscores why it’s going to take a long time.
Need to Know: No wonder Powell didn’t commit to extra hikes. Here are five reasons the January jobs report may be too good to be true.
What analysts are saying
“The takeaway from Powell’s comments was confirmation that the previously signaled quarter-point cadence remains valid, as do expectations for 2-3 additional hikes before achieving the endpoint for this cycle,” said BMO Capital Markets strategists Ian Lyngen and Ben Jeffery. “We’ll be the first to admit to falling into the intellectual trap of viewing the Fed’s eventual pause as representing the final effort to tighten, and therefore, see a conspicuous lack of symmetry of policy risk once rates plateau.”