Treasuries Move Higher Ahead Of Fed Minutes, Jackson Hole Symposium

(RTTNews) - Following the rebound seen in last Friday's session, treasuries saw further upside cover the course of the trading day on Monday.

Bond prices moved steadily higher in morning trading before moving roughly sideways in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 3.867 percent.

The strength among treasuries came as traders continued to express optimism about the outlook for interest rates following recent data showing slowdowns in the pace of inflation.

According to CME Group's FedWatch Tool, there is a 75.5 percent of a quarter point rate cut next month and a 24.5 percent chance of a half point rate cut.

Later this week, the minutes of the Federal Reserve's latest monetary policy meeting may shed additional light on the outlook for interest rates along with remarks by Fed Chair Jerome Powell and other Fed officials at the Jackson Hole Economic Symposium.

"September is being tipped as the month for that first Fed cut after inflation finally dropped below 3%," said Danni Hewson, AJ Bell head of financial analysis. "How far Jay Powell and the FOMC will go, how deep that first cut will be, and whether or not it could be the only one delivered this year are now the questions on investors' lips."

She added, "Nerves that the Fed had been too slow have been somewhat allayed, but every word spoken at this week's Jackson Hole Symposium will still be scrutinized."

In U.S. economic news, the Conference Board released a report showing its reading on leading U.S. economic indicators fell by much more than expected in the month of July. The Conference Board said its leading economic index slid by 0.6 percent in July after dipping by 0.2 percent in June. Economists had expected the index to decrease by 0.3 percent.

Meanwhile, the report said the index fell by 2.1 percent over the six-month period ending in July 2024, a smaller rate of decline than the 3.1 percent slump over the six-month period between July 2023 and January 2024.

"The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead," said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.

A lack of major U.S. economic data may lead to choppy trading on Tuesday, as traders look ahead to the Fed minutes and the Jason Hole symposium.