Treasury yields rose for the second consecutive day as investors awaited Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium. The 30-year yield increased to 5.19%, reaching its highest level since 2007 earlier in the month, and gained 0.91 basis points to 5.1941%. The 10-year Treasury yield rose 1.22 basis points to 4.676%, while the 2-year note yield, sensitive to Fed interest rate expectations, increased by 1.21 basis points to 4.236%. This surge in yields reflects investor concerns about inflation and the US fiscal outlook, with some analysts, like Torsten Slok of Apollo Global Management, expecting a hawkish tone from Warsh.
Despite the rising yields, US stock indexes saw gains, largely driven by strong performances in the technology sector. Nvidia's shares jumped 8.7% after the company provided a robust forecast, projecting 70% revenue growth for its upcoming fiscal year ending January 2028, significantly above analyst estimates. Other software firms also surged, with Salesforce climbing 22.6% after raising its annual revenue and profit forecasts, and CrowdStrike rising 20.5% after exceeding earnings estimates. The S&P 500 Information Technology sector was the best performer among the S&P 500's 11 constituents, gaining 3.4%.
The broader market saw mixed results. The S&P 500 closed 0.72% higher at 7,730.99, and the Nasdaq Composite gained 1.57% to 26,541.35. The Dow Jones Industrial Average rose 0.20% to 53,569.44. However, outside of technology, most sectors were in the red, indicating a concentrated rally. Investors are keenly focused on Warsh's upcoming Jackson Hole address for clues on the central bank's stance on inflation and future interest rate policy, with expectations that he may express skepticism about previous policy assumptions and emphasize the supply side of the economy.
Treasury Secretary Scott Bessent's recent actions, including plans to double buybacks of longer-dated debt, aimed at easing the economy's interest burden, have been met with mixed reactions. While some investors fear this could be seen as "price management" and damage Treasury's credibility, others view tools like unscheduled buybacks as a powerful "bazooka" that could be expanded. Meanwhile, the Federal Reserve policymakers left the federal funds rate unchanged at 3.5% to 3.75% at their latest meeting, with futures markets pricing in a quarter-point hike by year-end and a roughly one-third chance of a September increase.
