Hawkish Fed Speak Sends 10-Year Yield Back Near 3%

Rates rise across the curve, spurred by hawkish Fed speak. Treasury yields and swap rates rose across the curve today, continuing yesterday’s steepening trend. The 10-year Treasury yield ended the week at 2.97%, while the 2-year yield ended at 3.23%.  The rise in yields came after Fed President Thomas Barkin made it clear that the central bank is fully committed to curbing inflation, even if that means entering a recession. Unsurprisingly, equities didn’t take kindly to these hawkish comments, and U.S. equities fell across the board, the S&P 500 and Nasdaq Composite declining 1.29% and 2.01% on the day respectively.  

Baker Hughes Rig count was slightly down for the third consecutive week. The prior count was 964,000 for North America, while this week’s count came in at 963,000. WTI price has reduced over 25% from June highs. Decreasing energy prices have been the main factor in reversing month-over-month inflation, but core inflation has remained high.

Week ahead. On Monday, the Chicago Fed national activity index will be released, which will be followed by new home sales reports on Tuesday. Fed President Neel Kashkari is set to make public comments on Tuesday, which will be followed by the annual Fed Jackson Hole Economic Symposium on Wednesday. Fed Chairman Jerome Powell will then end the week by making public comments on Friday.