WASHINGTON (dpa-AFX) - After ending yesterday's choppy session slightly lower, treasuries showed a more significant move to the downside during trading on Friday.
Bond prices showed a lack of direction early in the session before coming under pressure in late-morning trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 4.8 basis points to 4.720 percent.
The weakness that emerged among treasuries came as Federal Reserve Chairman Kevin Warsh's first speech at the Jackson Hole economic symposium was seen as having a hawkish tilt.
As widely expected, Warsh began his remarks by highlighting his aversion to providing 'forward guidance,' noting his 'long-time discomfort with early pronouncements of future policy decisions.'
Warsh argued that oversharing policy deliberations and overcommitting to future decisions can lead markets, businesses, and households astray.
However, Warsh's comments about the current state of the economy may have provided some insight into his views about the outlook for interest rates.
The Fed chief noted people may well be concerned about possible future labor disruptions but said he believes labor markets are currently consistent with full employment.
Instead, Warsh said the numbers are more concerning with regard to the price-stability side of the Fed's dual mandate, with the annual rate of growth by the central bank's preferred measure of inflation standing at 3.7 percent
'None of these measures are perfect, but they all tell a similar story: Inflation is running above our 2 percent target,' Warsh said. 'So the Fed's predominant focus right now should be on prices.'
He added, 'We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That's our job . . . our mandate . . . and our charge to keep.'
Following Warsh's remarks, the chances the Fed will raise interest rates by a quarter point next month have jumped to 57.7 percent from just 35.4 percent yesterday, according to CME Group's FedWatch Tool.
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