Treasury yields climb ahead of Fed Chairman Powell’s remarks
U.S. Treasury yields climbed on Thursday, with Federal Reserve Chairman Jerome Powell due to deliver speeches later in the day.
The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.8728% at 4 a.m. ET. The 30-year Treasury bond yield rose 4 basis points to 2.9227%. Yields move inversely to prices and 1 basis point equals 0.01%.
Powell is due to deliver the welcome speech at the special Volcker Alliance and Penn Institute for Urban Research briefing at 11 a.m. ET.
He is next due to speak on the global economy during a panel discussion at the International Monetary Fund at 1 p.m. ET.
It comes after the IMF on Tuesday cut its forecast for global economic growth, for 2022 and 2023, largely due to the effects of Russia’s invasion of Ukraine.
Investors will be listening closely to Powell’s remarks for more clues about the Fed’s plans to aggressively tighten monetary policy to contain inflation.
Concerns about inflation and the potential effect of Fed policy tightening led yields to soar, with the 10-year rising to its highest level since late 2018 on Tuesday, at 2.94%.
Grace Peters, head of EMEA investment strategy at JPMorgan Private Bank, told CNBC’s “Squawk Box Europe” on Thursday that her team expects inflation to peak in the second quarter of this year and then falls more significantly towards the end of the year and continues into 2023.
However, she said that since this spike in inflation would not have been reflected in economic data at the time of Fed policy meetings in May and June, it made sense that the central bank could go from forward with rate hikes of 50 basis points, as market prices had done.
Peters said that “from a risk perspective, the concept of inflation peaking and therefore yields peaking in due course as well, will provide some comfort to investors.”
Meanwhile, the number of initial jobless claims filed last week is expected to be released at 8:30 a.m. ET.
The Russian-Ukrainian war remains at the center of investors’ concerns, with the second phase of the conflict, focusing on the Donbass region in eastern Ukraine, being fully underway.
Auctions are due to take place on Wednesday for $35 billion in four-week bills, $30 billion in eight-week bills and $20 billion in five-year inflation-protected Treasury securities.
— CNBC’s Holly Ellyatt contributed to this market report.