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Most Treasury yields remain high after the FOMC minutes, and as the Fed’s Bullard says, delta variants won’t upset the economy.

Minutes after the Federal Reserve Board’s July meeting, most Treasury yields remained high on Wednesday after showing most officials in favor of starting a tapering of asset purchases in 2021. bottom. Told MarketWatch The coronavirus delta mutant does not upset the economy.

What is the yield doing?
  • 10-Year Government Bond Yield
    TMUBMUSD10Y,
    1.260%

    It rose to 1.273%, compared to 1.258% EST on Tuesday at 3:00 pm. Yields and debt prices move in opposite directions.

  • Treasury bond yield for 2 years
    TMUBMUSD02Y,
    0.226%

    It was 0.217% compared to 0.215% on Tuesday.

  • 30-year government bond yield
    TMUBMUSD30Y,
    1.870%

    It fell from 1.919% on Tuesday afternoon to 1.913%. According to Dow Jones market data, this rate shows a maximum four-day decline in more than a month.

What is driving the market?

Minutes of the Federal Reserve Board’s July 27-28 meetingAnnounced Wednesday, most of the 19 federal officials have shown that it is appropriate to start reducing the monthly pace of asset purchases by $ 120 billion this year. These officials said they believe the Fed’s “substantial further development” benchmarks are met for inflation and “almost satisfied” with employment targets.

Also on Wednesday, Bullard, president of the Federal Reserve Bank’s regional bank in St. Louis, said: Said in a Barron’s live interview with MarketWatch As businesses and homes adapt to pandemics, the US economy will not be upset by the epidemic of delta variants of the coronavirus.His remark was the next day Federal Reserve Board Chairman Jerome Powell Tuesday was more cautious, saying it was still unclear what impact it would have on the economy.

In US economic data, Housing begins It fell in July, reflecting the ongoing supply constraints faced by construction companies nationwide. According to the US Census Bureau, US homebuilders began building homes in July with a seasonally adjusted annual rate of 1.53 million homes. This corresponds to a 7% decrease from the June upward revision.

The number of new home permits is seasonally adjusted at an annual rate of 1.64 million, an increase of 2.6% from June and 6% from a year ago.

Meanwhile, the Treasury’s $ 27 billion auction of 20-year bonds was “strong,” according to BMO Capital Markets strategist Ben Jeffrey.

What do analysts say?
  • Sean Bandazian, an investment analyst at Cornerstone Wealth, said, “If there is no significant reversal in strong job numbers or inflation data, the minutes are likely to accelerate the taper timeline in the coming months. It reflects the federal government that has been created. ” Note. “I’m not sure Powell will announce a taper at Jackson Hole next week, but it’s clear from the minutes that many Fed members are ready to recommend an imminent taper for asset purchases. Fed and market participation Both have learned lessons from the Tapered Fed. I don’t expect it to be that surprising this time, but there is still reason to believe that volatility is seen across the territory of interest rate-sensitive markets. ”

  • “The rise in the case of delta variants and the shift to considering reducing Fed stimulus has spurred an adjustment in investor perceptions of the pace and character of resumption,” he said. SEI Investments said in a memo. Still, “Investors can expect to offer one of the strongest post-war growth rebounds in the coming years, thanks to unprecedented stimulus and stagnant demand.”

  • “It’s clear from the minutes that the Fed isn’t ready to start tapering yet, but it tends to be announced by the end of the year,” said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance. Said. Email notes. “In the short term, the market will continue to focus on growth and delta variant concerns, but as we overcome these challenges, good news about the economy and the employment market should give investors new confidence.”

Most Treasury yields remain high after the FOMC minutes, and as the Fed’s Bullard says, delta variants won’t upset the economy.

Source link Most Treasury yields remain high after the FOMC minutes, and as the Fed’s Bullard says, delta variants won’t upset the economy.

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