August 22, 2016 / 7:26 PM / a year ago

TREASURIES-Yields fall, Yellen speech on Friday in focus

(Adds quote, background on Fed speakers, updates prices)
    * Yellen's Jackson Hole speech on Friday in focus
    * Treasury to sell $88 bln new supply

    By Karen Brettell
    NEW YORK, Aug 22 (Reuters) - U.S. Treasury prices gained on
Monday ahead of a speech by Federal Reserve Chair Janet Yellen
on Friday that will be scrutinized by investors for indications
of when the U.S. central bank will next raise interest rates.
    Yellen's address is in focus with no major U.S. economic
data due until Friday's second reading of gross domestic product
for the second quarter.
    "Everyone's kind of waiting on Yellen," said Lou Brien,
market strategist at DRW Trading in Chicago.
    Yellen will speak as central bankers from around the world
gather at an annual meeting in Jackson Hole, Wyoming.
 
    Benchmark 10-year notes gained 12/32 in price on
Monday to yield 1.54 percent, down from 1.58 percent late on
Friday.
    Yields rose overnight after Fed Vice Chair Stanley Fischer
said on Sunday that the Fed is close to hitting its targets for
full employment and 2 percent inflation. 
    "The fact that he started off with the words that we are
close to our (inflation) target is definitely hawkish," said
Gennadiy Goldberg, an interest rate strategist at TD Securities
in New York. "The question is does he represent the Fed's view."
    Fischer is the latest in a string of Fed officials
expressing an upbeat view of the U.S. economy.
    New York Fed President William Dudley last Tuesday said that
the Fed could raise rates as soon as September. 
    Atlanta Federal Reserve Bank President Dennis Lockhart also
said on Tuesday that the U.S. economy is likely strong enough
for at least one interest rate increase before the end of 2016,
with two hikes a possibility. 
    Most economists and investors view an increase in September
as a long shot and see December as more likely. 
    On the supply front, the Treasury Department will sell $88
billion in short and intermediate-dated coupon-bearing debt this
week, starting with a $26 billion auction of two-year notes on
Tuesday. 
    It will sell $34 billion in five-year notes on Wednesday and
$28 billion in seven-year notes on Thursday.

 (Editing by Steve Orlofsky)

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