Rates Take a Breather Ahead of Jackson Hole Speech

Rates fall ahead of Fed Chair Jerome Powell’s Jackson Hole speech. Swap rates and Treasury yields fell across the curve today as several Fed officials made public comments about the FOMC’s upcoming rate decision. Philadelphia Fed President Patrick Harker, though coy on the magnitude of the next hike, expressed that he would still consider a 50bp hike “substantial.” Atlanta Fed President Raphael Bostic was equally neutral, saying that at this point he’d “toss a coin between the two.” Swap rates and Treasury yields ended the day lower nonetheless, the 10-year Treasury yield falling 8bps to 3.03%.

GDP growth rate and initial jobless claims reports beat forecasts. The annualized GDP growth rate QoQ came in at -0.6% this morning, which was 0.3% better than expected, mostly a result of upward revisions to inventories and consumer spending. Elsewhere, initial jobless claims data showed a 2k decrease in the number of Americans who filed new claims for unemployment benefits in the week that ended August 20th. This was the lowest level for initial claims in about a month, also beating expectations by ~24k.

Day ahead. Friday is highlighted by long-awaited public comments from Fed Chair Jerome Powell. Tomorrow is also data heavy, with 8:30 AM ET releases such as wholesale and retail inventories, PCE price indexes, and personal income and spending.