U.S. Treasury, European Bond Yields Rise Ahead of Jackson Hole Symposium -- Update

By Emese Bartha

Yields on U.S. Treasury and European government bonds rose on Thursday as investors awaited the Kansas City Federal Reserve's upcoming Jackson Hole symposium.

Yields continued to hover at elevated levels across the board on both sides of the Atlantic, with investors awaiting signals from central bankers. The Jackson Hole symposium, which starts Thursday, will include a keynote speech by Federal Reserve Chairman Kevin Warsh on Friday.

U.S. Treasury yields were pushed higher after Wednesday's strong July PCE inflation data, the Fed's favored gauge of inflation. The headline PCE index rose 0.2% on the month after a 0.1% fall previously, beating analyst expectations of a 0.1% increase in The Wall Street Journal's poll.

The 10-year U.S. Treasury yield last traded up 0.6 basis points at 4.669%. The 10-year German Bund yield rose 3.1 basis points to 3.253% and the 10-year U.K. gilt yield rose 2 basis points to 5.032%, according to Tradeweb.

Warsh's comments will be scrutinized ahead of the Fed's next monetary policy decision on Sept. 16. Money markets currently price a 65% probability of the fed funds target rate range being left unchanged at 3.50%-3.75% at this meeting, according to LSEG.

"We expect Chair Warsh to use his Jackson Hole speech to reinforce a clearer division of responsibilities between the Federal Reserve and the U.S. Treasury," George Bory, chief investment strategist for fixed income at Allspring Global Investments said.

"The Fed is likely to remain focused on its traditional monetary policy mandate, using short-term interest rates to anchor the front end of the yield curve, while a more assertive Treasury takes greater responsibility for addressing the technical and market dynamics affecting longer-term yields," he said.

The Treasury last week announced it would double buybacks of long-end securities to at least $4 billion from $2 billion per operation.

Mizuho's multi-asset strategist Evelyne Gomez-Liechti expects a "relatively quiet" session as the Jackson Hole symposium begins, with the key event being Warsh's speech.

"First appearances by new Fed Chairs have generally avoided near-term policy signals, and Warsh has already indicated a preference for broader structural themes," the strategist said.

Warsh has so far avoided giving forward guidance, which is a change he has said he aims to put into effect during his tenure. Analysts expect he might therefore avoid hinting at possible interest-rate hikes if inflation remains elevated.

"His communication style is deliberately restrained; explicit forward guidance does not fit his approach," Joerg Held, head of portfolio management at Ethenea Independent Investors said in a note.

"A dovish signal is therefore likely to emerge indirectly--perhaps through an acknowledgement of the work done by internal task forces on inflation measurement--rather than through a clear statement regarding the interest-rate path."

For European bonds, rising gas prices are becoming a concern. European gas prices are near five-month highs even as the price of Brent crude oil has declined on reports of an interim framework between Iran and Oman aimed at resuming safe shipping via the Strait of Hormuz.

"Natural gas has also overtaken oil as the primary inflation concern for European bond traders," Jesper Fjarstedt, senior analyst at Danske Bank, said in a note.

Write to Emese Bartha at emese.bartha@wsj.com

(END) Dow Jones Newswires

August 27, 2026 07:17 ET (11:17 GMT)