- US treasury yields are flatlined despite upbeat comments from Fed’s Powell.
- Fed chair sounded upbeat on the US economy but mentioned housing, global growth and fiscal deficit as risks to US economy.
The treasury yields are trading in a sideways manner in early Europe even though Fed’s Powell said a “really strong” US economy is likely to continue growing.
As of writing, the 10-year treasury yield is trading largely unchanged on the day at 3.12 percent. Meanwhile, the two-year yield, which closely tracks the short-term rate expectations, is up just one basis point at 2.87 percent.
Fed Chair Powell, in an hour-long conversation with Dallas Federal Reserve President Robert Kaplan, sounded upbeat on the US economy but cited recent weakness in housing as a concern. Powell also mentioned the slowing growth abroad as the risk to the economic outlook and said that the positive effect of the fiscal stimulus is likely to wear off over time.
Powell’s comments on the housing market and the fiscal situation may have capped the upside in the treasury yields. However, he said nothing to counter expectations of a December rate hike. As a result, the path of least resistance for the treasury yields remains on the higher side.
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