Fed Chairman Remarks Flip the Script on Bonds

Dow Jones08-28 23:04

Kevin Warsh's Jackson Hole speech has triggered a "bear flattening" in the bond market-a phenomenon where Treasury yields generally rise but short-term yields rise much more than long-term yields.

The move is the opposite of what happened after the Federal Reserve chairman last spoke in public following the central bank's July 28-29 policy meeting. Then, yields on longer-term bonds surged while those on short-term Treasurys fell, indicating concerns that the Fed might wait too long to lift rates and then have to raise them aggressively down the road.

Now, investors are more confident that Warsh would support interest-rate increases. That has eased their concerns about inflation over the longer term, and caused the yield on the 30-year Treasury bond to actually fall a little.

At the request of the copyright holder, you need to log in to view this content

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment