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Investors are eagerly awaiting Friday's speech at Jackson Hole by Federal Reserve Chairman Jerome Powell as they seek guidance on the future of US monetary policy.
Treasury yields at 2 and 10 years were reversed just before Wednesday's bell. This means that the shorter term bond yielded more than the longer term bond. This is the second time this has happened this month and an inverted yield curve preceded each modern-day recession.
Bond yields rose on Thursday morning, which diverted investors' attention. The yield at 10 years is 1.66199%.
The minutes of the July Fed meeting indicated that the July rate cut was an adjustment by the Fed and that it wanted to keep its options open for future rate cuts. The July rate cut was the first since 2008. Mr. Powell is scheduled to speak Friday at 10 am Eastern Time.
Until now, forecasts of a rate cut in September are still at around 94%, slightly lower than Wednesday.
"If Powell refrains from signaling that easing measures will be put in place, it could cause the bond market to overreact and crush treasury yields, possibly raising the price of money." The argument that negative returns could eventually appear in America, "said Edward Moya, senior market analyst at Oanda.
Investors will have a glimpse of some economic data on Thursday morning: jobless claims and IHS Markit buy managers' index for the month of August.
While manufacturing activity in the United States has faded in recent months, the PMI could shed some light on whether the manufacturing sector has increased or decreased in August. The sector is on the verge of contraction.
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