US Government Bond 2Y

U.S. stock futures opened October in the green, with the Dow up 179 points, the Nasdaq up 169 and the S&P 500 up 32 points, helped by Brent crude holding at $100 per barrel and WTI near $90 per barrel. Bond yields continued to climb, with the 10-year at 5.285%, the 2-year at 4.858% and the 30-year at 5.637%, keeping mortgage rates elevated. Initial jobless claims came in at 197K last week, down 3K from expectations and 1K from the upwardly revised prior week, marking the third-straight sub-100K jobless claims report. Continuing claims reached a new near-term low of 1.701 million, down 11K month over month and below the downwardly revised 1.712 million from the previous week, remaining near 60-year lows for a third straight week. Later this morning, September Manufacturing PMI is expected to rise 3.1% on the S&P print and 0.3 points for ISM, while August Construction Spending is expected to rebound 0.1% after a 0.5% decline a month ago.

Asia Plus Securities stated that although the US PCE figure for August came in at 3.4% year-on-year, below market expectations, US 2-year and 10-year bond yields remain elevated at 4.89% and 5.28%, creating volatility for bank stocks in many countries. In the one month since Jackson Hole, the MSCI ACWI Banks index has fallen 3.4%, compared with a 1.3% decline in the MSCI ACWI, while the SETBANK index has continued to slide over the past two days, bringing its one-month loss to 4.3%, led by KKP down 6%, followed by KTB down 5.7% and KBANK down 5.6%, against a 1.9% decline in the SET. On the flood situation as of September 29, the Ministry of Industry reported that 40 provinces have been affected and that 204 SME operators have joined the debt-payment suspension programme, representing debt of about 769 million baht, a proportion that is not high compared with the 14 trillion baht in loans held by the eight banks. The research team estimates that every 0.25% increase in the risk-free rate above its assumption would reduce fair value by 4%, and views the correction in bank stocks as having already priced in some of the pressure from bond yields. It recommends gradually accumulating banks whose prices have fallen more than average over the past month, such as KTB, which has a fair value of 48 baht, followed by KBANK, which has a fair value of 259 baht and a PBV that has dropped to 0.9 times, compared with the sector average of 1.1 times.

Kasikorn Research Center, or KResearch, said the baht this morning stood at about 33.59-33.61 baht per dollar, compared with yesterday's market close of 33.59 baht per dollar, with the baht still moving in a weakening range, running counter to the dollar and rising US bond yields amid concerns over inflation pressure from oil prices after negotiations between the United States and Iran on the terms of opening the Strait of Hormuz ended without a conclusion. Iran, meanwhile, signaled that tensions could drag on until the US midterm elections. Yesterday, the 2-year US bond yield rose 8 bps to close at 4.93%, while the 10-year yield rose 8 bps to close at 5.24%, and this morning November-delivery BRENT was still trading above 106 dollars per barrel. KResearch estimates the baht's trading range today at 33.55-33.70 baht per dollar, with attention needed on the Middle East situation and global oil prices, foreign fund flows, and US economic data such as job openings and the labor turnover rate, or JOLTS, for August, and the September consumer confidence index. At the same time, signals from the yen also bear watching after Japanese authorities warned the market that they remain ready to step into the foreign exchange market if the yen weakens sharply or moves away from fundamentals.

The yield gap between 10-year and 2-year US Treasuries briefly narrowed to 17 basis points last week, its lowest level since early 2025. As the yield curve continues to flatten, the likelihood is growing that the 10-year yield will soon fall below shorter-term yields, producing an inversion. An inverted curve has long been regarded as a strong leading indicator of recession. The Fed raised rates this month for the first time in three years and signaled the possibility of further hikes, with the market pricing in at least three quarter-point increases over the next year. Zack Griffiths of research firm CreditSights noted that an inverted or sharply flattened curve raises questions about views on the strength of the economy. Jenadi Goldberg of TD Securities, meanwhile, said that because substantial rate hikes are already priced in, the 2-year to 10-year curve is likely to steepen in the coming weeks.

U.S. Durable Goods Orders for August came in at 0.0%, beating expectations of a -0.3% decline, while the Non-Defense, ex-aircraft proxy for business spending surged to +1.6%, more than triple the +0.5% analysts had expected. The report followed an unrevised +1.1% gain in July, with ex-transportation orders easing to +0.3% from +0.7% and shipments improving to -0.2% from -0.9%. The data landed as bond yields climbed to multi-decade highs, with the 30-year yield at +5.480%, the 10-year at +5.188% and the 2-year at +4.906%. Pre-market futures were higher, with the Dow up +111 points, the Nasdaq up +110 and the S&P 500 up +17, helped by lower oil prices at $92 per barrel on WTI and $104 per barrel on Brent crude. Attention now turns to the final read on the University of Michigan Consumer Survey, whose preliminary reading fell to 47.8 from 51.7, and to next week's Jobs Week data, with September non-farm payrolls expected at +162K and ADP private-sector payrolls at +38K.

The yield on the 30-year U.S. Treasury bond surged to 5.440%, its highest level since 2004, or in 22 years, amid expectations of interest rate hikes by the U.S. Federal Reserve. Meanwhile, the 10-year Treasury yield, the main benchmark for setting rates on mortgages, auto loans and credit card debt, climbed to 5.133%, its highest since July 2007. The 2-year Treasury yield, which tends to move in line with the Fed's policy rate decisions, remained near its highest level since 2023. Investors are increasingly betting that the Fed will raise rates two more times this year, following the surge in oil prices and U.S. Treasury yields. Most recently, the CME Group's FedWatch Tool indicated that investors assign a 66.4% probability to the Fed raising rates by 0.25% to 4.00-4.25% at its October meeting, up from 55.4% a week earlier, and a 50.3% probability to another 0.25% increase to 4.25-4.50% at the December meeting, up from 41.7% a week earlier. The Fed's monetary policy committee, the FOMC, voted unanimously 12-0 to raise short-term rates by 0.25% to 3.75-4.00% at its September 16 meeting, in line with market expectations, marking the first increase in more than three years, or since July 2023. Since then, the Fed has cut rates six times, by a total of 1.75%. The Dot Plot report, which shows Fed officials' projections, indicated that 16 of 18 officials expect one more rate hike this year. West Texas Intermediate crude rose above 93 dollars a barrel today, while Brent crude surged past 105 dollars a barrel. Fed Governor Michael Barr said he expects the Fed will need to keep raising rates to control inflation, noting that the labor market and economic growth remain strong, but inflation is still above the Fed's 2% target and there is no clear sign it will return to target within a reasonable timeframe. He added that risks to achieving the inflation target have increased, while risks to the labor market have diminished. Barr made these remarks as S&P Global reported that the preliminary composite Purchasing Managers' Index for U.S. manufacturing and services rose to 58.4 in September, a 62-month high, from 56.0 in August. At the same time, price pressures increased significantly, reaching their highest level since October 2022.

The US Federal Reserve announced a 0.25% increase in its policy rate to a range of 3.75-4% at its meeting on September 15-16, ending a pause of more than three years and signalling continued vigilance against inflation. Fed Chair Kevin Warsh, who took office in May 2026, said inflation remains elevated and that this rate hike aims to help inflation return to the 2% target more quickly. The Fed's new economic projections indicate the policy rate could rise by at least another 0.25% by the end of this year, with the median year-end rate at 4.00-4.25%. The Fed also raised its 2026 PCE inflation forecast from 3.6% to 3.7% and expects inflation to return to the 2% target in 2029, later than previously projected. Its 2026 GDP forecast was revised slightly up to 2.3% from 2.2%, and the year-end unemployment rate is expected at 4.1%. After the meeting, the yield on 2-year US Treasury notes rose to its highest level in more than two years. US Treasury Department data as of September 16 showed the 10-year Treasury yield surging to 5.00%, the 2-year at 4.67%, and the 30-year at 5.36%, flat to slightly lower. US stocks fell immediately on the news, with the Dow dropping more than 1% while the Nasdaq barely moved and the VIX edging slightly higher. Wolfe Research found that in the 6-12 months after the Fed's first rate hike, stocks typically recover into positive territory.

Yuanta Securities (Thailand) Company Limited, or YUANTA, shared its view on the direction of US monetary policy, noting that the Federal Open Market Committee voted unanimously 12-0 to raise interest rates by 0.25% to a range of 3.75-4.00%, the first increase in more than three years and the first under Fed Chair Kevin Warsh. This aligns with the Hike & More path YUANTA had previously anticipated. The Fed stated that the economy continues to expand strongly, domestic spending is resilient, and investment and employment are growing well, while inflation remains above target, so it aims to push inflation back to 2% more quickly. The point that is more hawkish than the rate figure itself is the upward revision of the entire Dot Plot, with the median rate for 2026 raised from 3.8% to 4.1%, for 2027 from 3.6% to 4.1%, and for 2028 from 3.4% to 3.9%. This indicates the Fed is likely to raise rates by another 0.25% before the end of this year and will not deliver a net rate cut in 2027, while 16 of 18 committee members see the rate at the end of 2026 higher than the level after this meeting. On economic projections, the Fed raised its 2026 GDP forecast from 2.2% to 2.3%, with 2027 at 2.4%, and lowered its unemployment rate forecast to 4.1% for both years, while raising its 2026 PCE inflation forecast to 3.7% and Core PCE to 3.4%. For investment strategy, YUANTA assesses that equities will be driven by earnings, with the US stock market the most attractive because valuations have been pushed below the average forward P/E of the past five years. On bonds, the meeting outcome reinforced a bear flattening, with 2-year bond yields rising more sharply than 10-year and 30-year maturities. It therefore recommends a core portfolio in bonds with an average maturity of 3-5 years and continues to recommend the UGISFX-N fund for unhedged global bonds. For aggressive investors, it recommends reducing the allocation to short-term global bonds or delaying investment until the NDAA policy review is completed. Once the core portfolio is complete, YUANTA recommends adding to satellite holdings, focusing on equities with strong earnings growth such as semiconductors, cybersecurity, and AI-related groups through the SCBSEMI (A) fund, as well as related DRs under the Wealth Compass portfolio. Meanwhile, gold remains an important diversification asset amid concerns over inflation, budget deficits, and geopolitical issues, with investment recommended in BGOLD, GOLD19, and GOLDUS19 combined at no more than 10% of the total investment portfolio.

Dr. Amornthep Chawala, Senior Executive Vice President and Head of the Research Office at CIMB Thai Bank, is warning investors to brace for global interest rates that may stay "higher for longer" than expected, after the US Federal Reserve raised its policy rate by 25 basis points to 4.00%, its first hike in three years. The Fed also signaled through its Dot Plot that rates will stay elevated through next year and that it may not rush to cut until 2028. In his view, a single hike is not enough to bring inflation under control, because monthly PCE figures for services and housing rents continue to climb, and there is a high chance the Fed will raise rates again in both October and December. The 10-year bond yield could drift to 5.3%, while the 2-year yield has already jumped to 4.74%, producing a yield curve flattening that is reflected in the CME FedWatch tool: investors do not believe the Fed will hike just once, and expect the Fed to push rates to 4.75% by the middle of next year. As for the impact on Thailand, the baht risks weakening to 34 per dollar on higher US rates plus oil prices still hovering above 100 dollars a barrel. And although the Monetary Policy Committee would like to hold rates steady, if the Fed keeps raising rates the Bank of Thailand may feel compelled to follow with a hike next year. The Fed sees US GDP growing 2.3% this year with unemployment at just 4.1%, and is sticking to the principle of a Monetary Policy of Discipline Not Decision to steer inflation back to its 2% target.

U.S. Treasury yields moved in opposite directions on Wednesday after the Federal Reserve raised its benchmark rate by 25 basis points to 4%. The U.S. 2 Year Treasury yield climbed to 4.65% from 4.60% just before the announcement, while the longer-end U.S. 30 Year Treasury yield slipped to 5.31% from 5.33%. The split flattened the curve, with front-end yields absorbing the first rate increase in more than three years and the official signal that another quarter-point hike is still penciled in for 2026, while longer-dated yields eased as investors questioned whether growth and inflation will remain strong enough to support a higher terminal rate for long. The Federal Open Market Committee's move matched market expectations, and its Summary of Economic Projections showed policymakers anticipating one additional 25-basis-point increase later this year. The reaction stayed orderly, and traders now look to incoming data to decide whether the extra tightening materializes or whether the long end continues to resist a higher-for-longer narrative.

The 10-year Treasury yield hit its highest level since 2007, hovering around 5.00% after reaching the 5% threshold yesterday and climbing as high as 5.04% today. The 30-year Treasury yield stood at 5.36%, while the two-year note rose to 4.66%, more than 1% above the Fed's funds rate, signaling to the Fed that investors want rate increases. The market anticipates the Federal Reserve will raise rates tomorrow by 25 basis points. Strategists attributed the move to factors including the unwinding of the Yen carry trade, higher oil prices, corporate bond issuance for the AI infrastructure buildout, rising real rates due to economic growth and infrastructure spending, and a supply energy shock tied to shipping disruptions in the Red Sea and China's increased oil purchases for reserves.

The yield on the 10-year US Treasury note, the benchmark bond yield, surged to its highest level in 19 years, or since 2007, today as investors heavily sold off US government bonds ahead of the meeting of the US central bank, the Fed, with widespread expectations that the Fed will raise interest rates at this meeting. At 12:10 pm Thailand time, the 10-year bond yield rose more than 0.06% to 5.025%, while the 30-year Treasury yield, which is more sensitive to geopolitical risk, climbed more than 0.05% to 5.384%, and the 2-year bond yield rose about 0.04% to 4.68%. The CME Group's FedWatch Tool indicates that investors assign more than 92% probability to the expectation that the Fed will raise interest rates by 0.25% at this meeting, after August inflation figures remained well above the Fed's 2% target. Jonathan Liang, chief investment officer for fixed income and currencies at Standard Chartered Bank, said the 10-year US Treasury yield is highly sensitive to inflation expectations, and as long as inflation remains above the Fed's 2% target, the strong correlation between inflation and bond yields is likely to persist for some time. Data from BMO Capital Markets indicates that over the past month, WTI crude oil prices and the 10-year US Treasury yield have moved strongly in the same direction, with a correlation as high as 0.96.

The yield on the 10-year US Treasury note climbed to 5% on Monday, September 14, its highest level in nearly three years, ahead of the Federal Reserve's monetary policy meeting this week. The 10-year bond yield has since pulled back to 4.987%, up more than 1 basis point, after spiking to 5.014%, its highest level since October 2023. The 2-year bond yield rose more than 1 basis point to 4.658%, after touching its highest level since July 2024 last week, while the 30-year bond yield fell less than 1 basis point to 5.353%. The moves came after the August consumer price index report on Friday, September 11, which came in line with expectations, with headline CPI up 0.4% month on month and up 3.4% year on year, while core CPI rose 0.3% month on month and 2.4% year on year. Data from CME Group's FedWatch tool indicates the market is pricing in a 92.3% probability that the Fed will raise interest rates by 0.25% at this meeting. Jason Ware, chief investment officer of Albion Financial Group, said the rise in yields is partly due to an imbalance between supply and demand in the bond market, and he expects the market will not be unsettled by the 10-year yield moving above the 5% level.

US Treasury Secretary Scott Bessent has pushed back against concerns over the selloff in the US bond market, affirming that the government bond market remains in very good shape. He noted that demand at the last two bond auctions was still strong, and said the moves in the bond market were consistent with unusually high energy prices. The selloff came after the US Treasury announced its first buyback tranche of 6 billion dollars, which was lower than the market had expected. The buyback auction on Thursday closed at 5.19 billion dollars, marking the third time the Treasury chose not to buy back the full amount it had set. Normally the Treasury receives offers to sell around 20 billion dollars, but this time it received only about 10 billion dollars. The 2-year bond yield jumped to its highest level since 2024, while the 10-year yield hit its highest since 2023 and was last at 4.96%, nearing a test of the 5% level. The 30-year yield traded near its highest since 2007. Bessent also explained that measures departing from normal practice, including expanding the bond buyback program and intervening in the Japanese yen, were partly a response to Iran's efforts to create economic problems for the United States through bond yields or oil prices. He insisted the moves were not made because of the approaching election.

Kasikorn Research Center reported that the baht this morning stood at about 33.11-33.13 per dollar, weakening from yesterday's market close of 32.94 per dollar. The baht has returned to trading on the weaker side of the 33.00 per dollar level, while the dollar drew support from the US producer price index for August, which came in higher than expected at 5.4% year on year, against a market forecast of 5.3%. As a result, the market now expects a greater chance that the US will raise its policy interest rate at next week's FOMC meeting. The dollar also received a boost from higher global oil prices and rising US bond yields, with the 2-year yield up 16 basis points to 4.59% and the 10-year yield up 12 basis points to 4.96%. For today, the baht is initially expected to move within a range of 33.05-33.20 per dollar. Factors to watch include the situation in the Middle East, the direction of the yen and gold prices, foreign fund flows, and US economic data such as the August consumer price index and the preliminary September consumer sentiment index.

On the 9th, the US Treasury announced that the initial expansion of its long-term bond buyback operation would be up to $6 billion. This is three times the $2 billion initially indicated to investors, but bond market strategists had anticipated it could reach $10 billion to $12 billion, so it fell short of expectations, and the cap of "up to" also caused disappointment. Following the announcement, the 10-year Treasury yield rose to 4.8528%, a high not seen since 2023. The 2-year yield also reached a two-year high since 2024. Market participants criticized that this buyback program does not fundamentally solve the US fiscal situation and is merely a temporary measure, with some suggesting that the scale is too large to have an impact. The buybacks will continue until November 4th, and it remains to be seen whether the Treasury market will show resistance to the Treasury's intervention.

The yield on the 2-year U.S. Treasury note surged to 4.379% today, the highest level since January 2025, after the U.S. reported stronger-than-expected employment data. Investors have increased their bets that the Federal Reserve will raise interest rates in September, having previously expected the Fed to hold rates steady. The latest FedWatch Tool from CME Group indicates that investors now assign a 60.2% probability that the Fed will raise rates by 0.25% at its September meeting, up from 49.4% yesterday. Meanwhile, the U.S. Labor Department reported that nonfarm payrolls rose by 162,000 jobs in August, surpassing analysts' expectations of 55,000 jobs, while the unemployment rate held steady at 4.1%, in line with forecasts. Average hourly earnings increased 3.1% year-over-year, above the expected 3.0%, a figure the Fed closely monitors for signs of inflation.

Gold prices fell today after the US released stronger-than-expected employment figures, which will support the Federal Reserve's decision to raise interest rates this month. Spot gold [GOLD.X] dropped $47.41, or 1.06%, to $4,445.19 per ounce, while COMEX gold futures for December delivery fell $54.31, or 1.21%, to $4,485.60 per ounce. The market was also pressured by a stronger dollar and a rebound in US Treasury yields following the jobs data, with the 2-year Treasury yield surging to 4.425%, the highest level since January 2025. Investors increased their bets on a Fed rate hike in September, with the CME Group's FedWatch Tool indicating a 60.2% probability of a 0.25% rate hike at the September meeting, up from 49.4% yesterday. The US Labor Department reported that nonfarm payrolls rose by 162,000 jobs in August, well above the 55,000 expected by analysts, while the unemployment rate held steady at 4.1%, in line with forecasts. Average hourly wages increased 3.1% year-over-year, exceeding the 3.0% forecast.

U.S. stocks declined on Friday, with the Dow Jones Industrial Average falling 215.11 points, or 0.40%, to 53,471.00 points, after the U.S. reported that nonfarm payrolls increased by 162,000 jobs in August, significantly higher than the 55,000 jobs analysts had expected. This prompted investors to increase their bets that the Federal Reserve may raise interest rates by 0.25% at its September meeting. The CME Group's FedWatch Tool indicated that the probability of such a move rose to 60.2% from 49.4%. Meanwhile, the yield on the 2-year U.S. Treasury note surged to 4.425%, its highest level since January 2025. The unemployment rate held steady at 4.1%, and average hourly earnings rose 3.1% year-over-year, above the expected 3.0%.

The Dow Jones Industrial Average fell more than 200 points today after the U.S. reported stronger-than-expected employment figures, which could support a rate hike by the Federal Reserve this month. As of 9:04 p.m. Thai time, the Dow was down 215.11 points, or 0.40%, to 53,471.00 points. The market was also pressured by a surge in the yield on the 2-year U.S. Treasury note, which rose to 4.425%, the highest level since January 2025. The U.S. Labor Department reported that nonfarm payrolls rose by 162,000 in August, well above analysts' expectations of 55,000. The unemployment rate held steady at 4.1%, and average hourly earnings increased 3.1% year-over-year, above the forecast of 3.0%. The latest CME Group FedWatch Tool indicates that investors now see a 60.2% probability of a 0.25% rate hike by the Fed at its September meeting, up from 49.4% yesterday.

Finansia Syrus Securities expects the SET to move within a range of 1,575-1,590 points today, after the US Federal Reserve Chairman signaled a hawkish stance at the Jackson Hole meeting, causing the market to increase the probability of a rate hike in September to 57% from the previous 35-40%. Meanwhile, the US 2-year Treasury yield rose to 4.34% and the dollar strengthened near 100 points, pressuring risk assets including gold prices. Brent oil prices edged up close to $90 per barrel after the US attacked Iranian rocket launchers. This week, attention is on US non-farm payrolls data, while Thai politics may add volatility. The recommended strategy is Selective Buy, focusing on stocks with strong second-half earnings.

Federal Reserve Chairman Kevin Warsh said in a speech at the Jackson Hole meeting that inflation remains high and must move clearly and quickly toward the 2% target. This led markets to increase the probability of a rate hike in September to 55.7%, according to CME FedWatch data. Warsh avoided committing to forward guidance and called on the Fed to communicate more purposefully. Meanwhile, the 2-year Treasury yield surged nearly 8 basis points to 4.31%, the highest since late July. Economists see Warsh as opening the door for a rate hike, which may not occur in September but could happen in October or December.

Following Federal Reserve Chair Kevin Walsh's hawkish stance in his Jackson Hole speech, Bitcoin fell from over $80,000 the previous day to around $77,100 at one point, and US stock markets also weakened. The S&P 500 closed down 0.25% and the Nasdaq Composite down 0.52%, but on the week they were up 0.49% and 0.85%, respectively. Walsh prioritized curbing inflation, made no mention of rate cuts, and said financial conditions are "not broadly restrictive." After the speech, CME's FedWatch tool showed the probability of a September rate hike rose from around 35% the previous day to about 55-60%, and the 2-year Treasury yield rose 7-9 basis points. On the prediction market platform Polymarket, the probability of a rate hike by mid-2026 rose to 68%. The Fed's next meeting is scheduled for mid-September, setting up a confrontation with President Trump's demands for rate cuts.

Federal Reserve Chairman Kevin Warsh signaled the central bank may not be done fighting inflation, a stance that boosted bond yields and led to choppy trading in stocks. The Dow industrials rose after Warsh's speech, then pared gains in midday trading, while short-term Treasury yields moved higher as his comments at the Kansas City Fed's annual conference in Jackson Hole, Wyo., were taken as a sign that interest rates could rise. The 2-year Treasury yield recently traded at 4.33%, up from about 4.23% before the speech. The Nasdaq composite and chip stocks are lower after Marvell Technology's earnings disappointed investors, with shares sinking 10% despite higher revenue and profit. Oil prices are retreating, with Brent crude futures trading at about $88 a barrel.

Global equities rose alongside short-dated Treasury yields and the dollar on Friday as traders increased bets on a Federal Reserve interest rate hike following a speech by Fed Chair Kevin Warsh at Jackson Hole. Warsh said the central bank will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target, and he acknowledged that financial conditions do not appear restrictive. After his remarks, the probability of a rate hike at the September meeting jumped to 55.7% from 35.4% on Thursday, according to CME Group's FedWatch tool. The Dow Jones Industrial Average rose 162.95 points, or 0.30%, to 53,732.39, the S&P 500 gained 29.12 points, or 0.38%, to 7,760.11, and the Nasdaq Composite added 111.40 points, or 0.41%, to 26,652.75. The 2-year Treasury yield climbed 7.84 basis points to 4.312%, while the dollar index rose 0.36% to 99.47. Oil prices drifted lower, with U.S. crude falling 0.63% to $83.00 a barrel, and gold slipped 0.61% to $4,572.99 an ounce.

Federal Reserve Chairman Kevin Warsh warned Friday that recent inflation readings have not demonstrated meaningful improvement in underlying price trends, while stopping short of signaling whether interest rates would need to rise. Speaking at the Kansas City Fed's annual symposium in Jackson Hole, Wyoming, his first keynote address at the event, Warsh said the central bank remains squarely focused on bringing inflation to heel. The Fed's benchmark federal funds rate currently stands at a target range of 3.5% to 3.75%. Warsh acknowledged that this summer's inflation readings came in better than expected but said they did not tell him that underlying trends had meaningfully improved. He reinforced his opposition to forward guidance and declined to outline his reaction function, saying policymakers cannot claim sufficient certainty to follow a preset rule. Markets moved on the remarks, with the 2-year Treasury yield rising to 4.28% and traders moving the odds of a rate hike at the September 15-16 meeting to roughly 50%. Warsh also argued that responsibility for 65 months of sustained, elevated inflation rests with the central bank.

U.S. bond yields climbed to multi-year highs on Tuesday as new economic reports showed a cooling housing market and declining trade activity. The 30-year yield reached 5.32%, its highest in 19 years, while the 10-year yield hit 4.74%, a 19-month high, and the 2-year hovered around 4.20%. Housing starts for July fell to 1.239 million units, below the 1.35 million expected, with single-family starts down 9.9% month over month, while building permits rose 5% to 1.443 million units. Import prices unexpectedly dropped 0.4% in July, and exports fell 1.3%, the lowest monthly read in over three years. Home Depot beat second-quarter earnings estimates with $4.92 per share versus $4.71 expected, and revenue of $47.86 billion, up 1.88% from estimates.