U.S. Treasury yields inched lower on Wednesday as investors analyzed the Federal Reserve’s meeting minutes from July.
The 10-year Treasury yield dipped about 1 basis point to 4.289%. The 2-year yield was less than 1 basis point lower at 3.748%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
The meeting minutes showed that the Fed was concerned about both inflation and the labor market, though most voting members felt it was too soon to lower interest rates. These minutes were of particular interest given that Fed Governors Christopher Waller and Michelle Bowman dissented on the decision, the first time two voting Fed officials have done so since 1993.
“Participants generally pointed to risks to both sides of the Committee’s dual mandate, emphasizing upside risk to inflation and downside risk to employment,” the minutes noted. While “a majority of participants judged the upside risk to inflation as the greater of these two risks” a couple saw “downside risk to employment the more salient risk.”
Global central bankers will gather in Jackson Hole, Wyoming, from Thursday to Saturday for the Fed’s annual economic symposium, which investors will monitor for hints about future monetary policy decisions. Fed Chairman Jerome Powell is slated to give a speech on Friday at the symposium.
Traders are pricing in an approximately 84% chance of interest rate cuts in September, per the CME’s FedWatch Tool.
“We expect this year’s Jackson Hole meeting to offer an opportunity for Powell to again nod towards monetary easing,” said Andrzej Skiba, head of the BlueBay U.S. Fixed Income team at RBC Global Asset Management. “While there are some hot spots in this month’s inflation reading, it’s probably not enough to deter the doves on the committee.”
