Two-year Treasury yield jumps 14 basis points and the curve flattens
The US Treasury's daily yield curve for 28 August showed the two-year yield rising from 4.20 per cent to 4.34 per cent and the ten-year from 4.52 per cent to 4.59 per cent, narrowing the gap between the two maturities from 32 basis points to 25. The move concentrated at the front of the curve. Investors read Fed Chair Warsh's Jackson Hole address as mildly hawkish for the near term, and the S&P 500 fell 0.25 per cent on Friday.
Economics & Markets··Morning
Treasury curve rises at the front end
The US Treasury's daily par yield curve recorded the two-year yield rising from 4.20 per cent to 4.34 per cent in the 28 August session. The ten-year moved from 4.52 per cent to 4.59 per cent, the five-year from 4.38 per cent to 4.48 per cent and the 30-year from 5.18 per cent to 5.21 per cent. The gap between the two-year and ten-year maturities narrowed from 32 basis points to 25. Treasury derives these rates from indicative bid-side market price quotations collected each day by the Federal Reserve Bank of New York and publishes them as constant maturity rates.[1]
Warsh speech lifts short-dated yields
The weight of the move sat at the front of the curve: 14 basis points at the two-year, 7 at the ten-year and 3 at the 30-year. The shift followed Fed Chair Warsh's first keynote at Jackson Hole. Investors spent the session working through that address, which the market read as mildly hawkish for the near term. His line that the Fed's predominant focus right now should be on prices pushed short-dated Treasury yields higher.[1], [2]
Wall Street turns lower into the close
The indexes tried to hold gains during the day and turned lower into the close. The S&P 500 fell 19.23 points on Friday, a 0.25 per cent loss that left it at 7,711.76. The Nasdaq Composite dropped 138.93 points, or 0.52 per cent, to 26,402.42, while the Dow Jones ended almost flat at 53,559.99, down 9.45 points.[2]
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