WASHINGTON (dpa-AFX) - Treasuries moved sharply higher during trading on Friday, as traders reacted to Federal Reserve Chair Jerome Powell's highly-anticipated speech before the Jackson Hole Economic Symposium.
Bond prices surged early in the session and remained firmly positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 7.0 basis points to 4.260 percent.
While Powell touched only briefly on the outlook for monetary policy, his remarks increased investor confidence that the Fed will lower interest rates next month.
Powell noted the labor market remains near maximum employment and inflation has come down a great deal from its post-pandemic high but cautioned 'the balance of risks appears to be shifting.'
He noted interest rates are a full percentage point lower than a year ago and said the 'stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.'
'Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,' Powell added.
The Fed Chief reiterated that monetary policy is not on a 'preset course' and stressed that future interest rate decisions would be 'based solely on [officials'] assessment of the data and its implications for the economic outlook and the balance of risks.'
Following Powell's remarks, CME Group's FedWatch Tool is currently indicating an 85.2 percent chance the Fed will lower rates by a quarter point next month, up from 75.0 percent on Thursday.
Looking ahead, next week's trading may be impacted by reaction to reports on new home sales, durable goods orders, consumer confidence, second quarter GDP and consumer price inflation.
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