U.S. Treasury yields were slightly higher on Friday, as traders await Federal Reserve Chairman Jerome Powell’s comments at the central bank’s Jackson Hole symposium.
Markets will be closely watching Powell's comments for hints on the probable path of U.S. monetary policy. A recent surge took 10-year yields to their highest level since November 2007 earlier this week, as investors grappled with a surprisingly resilient U.S. economy and the possibility that inflation stays sticky, forcing the central bank to keep interest rates higher for longer.Sign up for NBC LA newsletters.
Michael Arone, chief investment strategist at State Street SPDR, said that Powell should take a"victory lap" at the conclusion of the conference in Wyoming, with the Fed having so far succeeded in bringing inflation down significantly without tipping the economy into a recession. "But the Fed likely isn't convinced inflation has been beaten. As a result, there won't be any curtain calls at Jackson Hole. Instead, investors should expect more tough talk from Chairman Powell that the Fed is more committed than ever to defeating inflation," Arone said in a note on Thursday.
"That work will be complicated by the Fed underestimating the impact of structural changes to the labor market that could keep inflation above 2% and put the soft landing in jeopardy."
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