Most Treasury yields remain high after the FOMC minutes, and as the Fed’s Bullard says, the delta variants will not disrupt the economy.

Minutes after the Federal Reserve’s July meeting, most Treasury yields remained high on Wednesday after showing most officials in favor of starting a reduction in asset purchases in 2021. low. Told MarketWatch Coronavirus delta mutant does not disrupt the economy.

What does the yield do?
  • 10-year government bond yield
    TMUBMUSD10Y,
    1.260%

    It rose to 1.273%, from 1.258% EST on Tuesday at 3:00 p.m. The yields and prices of debt move in opposite directions.

  • Yield on 2-year treasury bills
    TMUBMUSD02Y,
    0.226%

    It was 0.217% against 0.215% on Tuesday.

  • Yield on 30-year government bonds
    TMUBMUSD30Y,
    1.870%

    It went from 1.919% on Tuesday afternoon to 1.913%. According to Dow Jones market data, this rate shows a maximum drop of four days over more than a month.

What drives the market?

Federal Reserve Board Meeting Minutes July 27-28 Announced Wednesday, most of the 19 federal officials showed it was appropriate to start slashing 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 “nearly satisfied” with employment targets.

Also on Wednesday, Bullard, chairman of the Federal Reserve Bank’s regional bank in St. Louis, said: Said in a live Barron interview with MarketWatch As businesses and homes adjust to pandemics, the U.S. 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 on Tuesday was more cautious, saying it was still not clear what impact it would have on the economy.

In US economic data, housing starts It fell in July, reflecting the lingering supply constraints facing construction companies nationwide. According to the US Census Bureau, US home builders began building homes in July with a seasonally adjusted annual rate of 1.53 million homes. This corresponds to a decrease of 7% from the upward revision in June.

The number of new housing 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 $ 27 billion 20-year Treasury bond auction was “strong,” according to BMO Capital Markets strategist Ben Jeffrey.

What are the analysts saying?
  • Sean Bandazian, investment analyst at Cornerstone Wealth, said: “If there is no significant reversal in employment numbers or inflation data, the minutes are likely to accelerate the timing of. reduction in the coming months. It reflects the federal government that was created. “Note.” I’m not sure Powell will announce a cut at Jackson Hole next week, but it’s clear from the minutes that many Fed members are prepared to recommend an imminent cut in asset purchases. Fed and stake to the market Both learned lessons from the Tapered Fed. I don’t expect it to be so surprising this time around, but there is still reason to believe that volatility is being seen in the territory of market-sensitive markets. interest rate. “

  • “The increase in the case of delta variants and the shift to consideration of the Fed’s stimulus cut has prompted investors to adjust perceptions of the pace and character of the recovery,” he said. SEI Investments said in a memo. Still, “investors can expect to deliver one of the strongest post-war growth rebounds in the years to come, thanks to unprecedented stimulus and stagnant demand.”

  • “It is clear from the minutes that the Fed is not yet ready to start cutting back, but that tends to be announced by the end of the year,” said Chris Zaccarelli, chief investment officer of the ‘Independent Advisor Alliance. Noted. Notes by email. “In the near term, the market will continue to focus on growth and delta variant issues, but as we overcome these challenges, the good news about the economy and the job market should give investors new confidence. . “

Most Treasury yields remain high after the FOMC minutes, and as the Fed’s Bullard says, the delta variants will not disrupt the economy.

Source link Most Treasury yields remain high after FOMC minutes, and as the Fed’s Bullard says, delta variants will not disrupt the economy.


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