The U.S. bond market falls into "silence" as traders await Powell's speech
The U.S. Treasury market paused trading due to upcoming economic data releases and speeches by Federal Reserve officials. The market is closely watching jobless claims and economic growth data, which may impact the Fed's interest rate decision in November. Traders expect the Fed to cut rates three times before the end of the year, each time by 25 basis points. The yield on the 10-year U.S. Treasury bond slightly declined to 3.78%
Zhitong Finance APP noticed that on Thursday evening, the United States will release a series of economic data, and several Federal Reserve officials will give speeches, which may determine whether the Fed will make another significant rate cut in November. Traders have paused trading in US Treasuries.
The US initial jobless claims data and the revised second-quarter economic growth data will reveal the economic situation. Then, Federal Reserve Chairman Powell will deliver the opening speech at the 10th Annual US Treasury Market Conference in New York, along with eight policymakers.
Hauke Siemssen, a strategist at Deutsche Bank, said, "Given the sensitivity of the Fed's data, these data may cause market fluctuations. This may raise questions about whether the Fed will cut rates by 50 basis points in November for the second time."
There is a significant difference in the money market on whether the Fed will cut rates by 25 basis points or 50 basis points at the next meeting. Earlier this week, US consumer confidence data saw the largest drop in three years, increasing market expectations of a Fed rate cut. Traders expect the Fed to cut rates three times by the end of the year, each time by 25 basis points.
Evelyne Gomez-Liechti, a strategist at Mizuho International, expects that if economic growth data falls below expectations and initial jobless claims exceed expectations, the yield on the US 10-year Treasury bond will drop below 3.75%.
As of the time of writing, the 10-year US Treasury yield has fallen by 1 basis point to 3.78%, after rising by 6 basis points the previous day