Treasuries-Yields edge up on steady inflation, ahead of Jackson Hole

The 2-year note US2YT=RR yield, which typically moves in step with Fed interest rate expectations, rose 1.98 basis points to 4.224%. The yield on benchmark U.S. 10-year notes US10YT=RR rose 2.93 basis points to 4.668%. The yield curve between two- and 10-year notes US2US10=TWEB flattened to 43 basis points, the flattest level since August 7. Warsh’s remarks will be closely watched for signs of whether the Fed is leaning toward a more hawkish stance on inflation, as well as any comments on Treasury Secretary Scott Bessent's debt buyback plans. Warsh has previously advocated for a more limited Fed role in markets, including reduced forward guidance. Tom di Galoma, managing director of global rates trading at Mischler Financial Group, said the buyback plans appear to be helping to support bond demand. “I think accounts are probably in a buy mode rather than a sell mode.” The Treasury saw solid interest in a $70 billion sale of five-year notes. The debt sold at a high yield of 4.393%, close to where it traded ahead of the auction. Demand was 2.37 times the amount of debt on offer, the highest since November. The U.S. government also saw good interest in a $69 billion sale of two-year notes on Tuesday and will auction $44 billion in seven-year notes on Thursday. **NEW YORK, Aug. 26 (Reuters)** - U.S. Treasury yields rose on Wednesday after data showed annual inflation held steady in July instead of easing as economists had expected. Traders also monitored developments in the Iran conflict and continued to weigh the Treasury's plans to expand debt buybacks. Oil prices rose in a choppy session on Wednesday, as investors monitored talks between Iran and Oman on the Strait of Hormuz and a smaller-than-expected rise in U.S. crude stocks. Iran and Oman are still working on the details of an agreement on the Strait of Hormuz, a senior Iranian source said on Wednesday, after Iran's Revolutionary Guards said the two countries had agreed how to share the waterway and its revenues. The Personal Consumption Expenditures Price Index increased 3.7% in the 12 months through July, unchanged from June. Economists polled by Reuters had forecast a reading for PCE, which the Fed uses to set its target, of 3.6%. Core prices, which exclude food and energy, rose 3.3% on the year, in line with economists’ expectations. “Core-PCE was consistent with the Fed's characterization of the July inflation data as somewhat encouraging, but sufficient to keep the risk of a September 16 rate hike in play as Jackson Hole approaches,” said Vail Hartman, U.S. rates strategist at BMO Capital Markets. Federal Reserve Chairman Kevin Warsh is set to speak on Friday at the central bank's Jackson Hole symposium. Traders are pricing in 35% odds of a September rate hike, rising to 75% by December. Updated data for annualized gross domestic product growth for the second quarter on Wednesday was also unchanged at 1.5%. Among the notable changes from the first estimate was an upward revision to consumer spending during the April-through-June period to 3.4% from the originally reported 3.2%, an indication that the individual consumption that supports two-thirds of U.S. economic activity had held up through the first half of the year.

Treasuries-Yields edge up on steady inflation, ahead of Jackson Hole

Yields, curve, and auction demand

Inflation holds steady and yields rise

Oil prices and Middle East developments

PCE and GDP data keep rate-hike risk in play

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