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Bond Market Like a Coiled Spring Before Long-Awaited Fed Confab

  • Neutral Treasuries positioning matches highest since February
  • Clients have ‘more cash than they would like’: Stifel’s Ahrens
Federal Reserve Jackson Hole Economic Symposium
Photographer: David Paul Morris/Bloomberg

Treasuries are like a coiled spring ahead of the Federal Reserve’s long-awaited Wyoming confab, with traders showing less conviction than they have in months about the market’s next move.

Benchmark yields finished this week little changed from seven days earlier, even after a stretch that saw a record-breaking 10-year auction, the lowest consumer-sentiment reading in a decade and another elevated inflation figure. JPMorgan Chase & Co. client data sum up the market’s stance perfectly: The number with a neutral position on Treasuries hasn’t been higher since February.

Traders are now looking to the Fed’s Aug. 26-28 symposium in Jackson Hole, an annual event that’s been the setting for important announcements in the past. For months, the fixed-income market has viewed it as a potential venue for Fed Chair Jerome Powell to lay out the timing and contours of the central bank’s expected move to taper its bond-buying program, although for some the resurgence of coronavirus cases is complicating that calculation.