30-year Treasury yield drops, but stays near two-week highs

Ahead of Powell’s Jackson Hole speech, three non-voting members of the FOMC indicated that they back the tapering of bond buys sooner rather than later

The 30-year Treasury yield dropped, while the 10-year rate was unchanged, on Thursday after an auction of $62 billion in 7-year Treasury notes produced average results.

Yields on both maturities remained near their highest levels for the past two weeks, while data showed the U.S. economy grew slightly faster than previously estimated in the second quarter. Meanwhile, three non-voting Federal Reserve officials backed a tapering of bond buying sooner rather than later, leading into Fed Chairman Jerome Powell’s Jackson Hole speech on Friday.

The move in yields came after an auction of $62 billion in 7-year Treasury notes produced what Jefferies LLC economists Thomas Simons and Aneta Markowska described as “very average stats.”

Ahead of Powell’s Jackson Hole speech on Friday, three non-voting members of the Federal Open Market Committee (FOMC) indicated that they back the tapering of bond buys sooner rather than later.

Kansas City Fed President Esther George, in an interview with CNBC on Thursday, said: We have made substantial further progress and we can begin to talk about backing off some of that accommodation. Meanwhile, in a separate interview with the network, St. Louis Fed President James Bullard joined George’s call for starting the taper process soon. He said the economy was booming. And Dallas Fed President Rob Kaplan, seeing resiliency in the face of the delta variant, stuck with his prior call for a September taper announcement.

The U.S. economy grew a bit faster in the spring than previously estimated, but not enough to change the underlying growth trend as the recovery from the pandemic continues. Gross domestic product, the official scorecard for the U.S. economy, rose at a revised 6.6% annual pace in the second quarter, the government said.