FX.co ★ US 10-Year Yield Holds Advance

The yield on the 10-year US Treasury note hovered around 4.67% on Friday, following two straight sessions of gains, as investors awaited Federal Reserve Chair Kevin Warsh’s speech at the annual Jackson Hole symposium later in the global day for signals on the future path of US interest rates. Yields were also underpinned by a stronger-than-expected US inflation reading earlier in the week, which reinforced expectations of a Fed rate hike before year-end, with the implied probability of an increase by December holding above 70%. For the September policy meeting, markets are currently pricing in roughly a 65% chance that the Fed will leave rates unchanged. Meanwhile, Kansas City Fed President Jeff Schmid stated that monetary policy is not currently restraining economic activity. At the same time, investors continued to evaluate the impact of the US Treasury’s expanded debt buyback program, which has intensified concerns about the risk of a US debt crisis and potential dollar weakness.