European Leaders Meet in Washington in Push for Peace

Yields inch higher ahead of the Fed’s Economic Policy Symposium. UST yields traded within a 4-6 bp range in a relatively quiet session today that was absent of key economic data. Markets are primarily awaiting commentary from the Economic Policy Symposium kicking off on Thursday, where Chair Powell is expected to detail the Fed’s new policy framework. Ultimately, yields closed 1-2 bps higher, with the 2-year yield at 3.76% and the 10-year yield at 4.33%. Meanwhile, WTI and Brent rose 0.99% and 0.88%, respectively, with Ukrainian President Zelenskyy now in the US to discuss a deal with Russia.

European leaders, Ukrainian President Zelenskyy, meet with Trump in Washington. Following his summit with Russian President Putin last week, President Trump publicly supported Russia’s demand that Ukraine cede land as part of a peace agreement. The announcement spurred panic among European leaders, many of whom hastily flew to Washington, D.C. to back Zelenskyy. Visitors include German Chancellor Merz, French President Macron, Italian Prime Minister Meloni, Finnish President Stubb, NATO Secretary General Rutte, and European Commission President von der Leyen. Zelenskyy has vehemently opposed land concessions but remains reliant on the US as a partner in peace-talks. Trump has said he plans to call Putin after today’s meetings and is now pushing for a trilateral meeting with Russia and Ukraine.

The Fed’s Economic Policy Symposium begins Thursday in Jackson Hole, WY. The Economic Policy Symposium has been used historically to announce major policy changes, and many expect Jerome Powell will reveal the Fed’s updated policy on Friday. The policy could include new approaches toward the Fed’s dual mandate, maximizing employment and stabilizing prices, while Powell could also offer hints about September’s FOMC meeting. However, Powell will likely choose his words carefully to avoid committing to a decision a month in advance, on par with his “data-dependent” approach over the past few years. Currently, markets seem to weigh the weakening labor market over persistent inflation, with futures pricing in an 84% chance of a rate cut next month.