Fedspeak Tuesday: Heightened Volatility if Bostic Hints at Rate Cut

U.S. Treasury yields inched lower on Monday as investors shrugged off Friday‘s stronger-than-expected non-farm payrolls report and shifted their focus to Federal Reserve Chairman Jerome Powell’s testimony on Capitol Hill later in the week.

U.S。周一美国国债收益率走低，因投资者对周五强于预期的非农就业报告不以为然，并将焦点转移到美联储主席杰罗姆鲍威尔本周晚些时候在国会山的证词。

The focus on Tuesday is likely to be on Fedspeak. The key events later this week will be Powells testimony before the House Financial Services Committee Wednesday and the Senate Banking Committee on Thursday.

星期二的重点可能是Fedspeak。本周晚些时候的关键事件将是鲍威尔周三向众议院金融服务委员会和参议院银行委员会提供的证词。

After soaring through the psychological 2% level on Friday, the yield on the benchmark 10-year Treasury note fell to 2.02% yesterday, while the yield on the short-term 2-year Treasury note rate inched higher to 1.868%.

在周五飙升至心理2％的水平后，基准10年期美国国债收益率昨日跌至2.02％，而短期2年期国债收益率小幅上涨至1.868％。

Fedspeak Tuesday

Fedspeak周二

Powells speech on Tuesday is listed as a major event, but he is actually due to make introductory remarks for Atlanta Federal Reserve President Raphael Bostic and St. Louis Federal Reserve President James Bullard at a conference in St. Louis while Quarles will make a keynote address on stress testing.

鲍威尔周二的讲话被列为重大事件，但实际上他应该为亚特兰大联邦储备委员会主席拉斐尔博斯蒂奇和圣路易斯联邦储备银行总裁詹姆斯布拉德做介绍性发言。在圣路易斯举行的一次会议上，Quarles将就压力测试发表主题演讲。

On May 20, Bostic said he does not see the central bank cutting interest rates, contrary to market expectations. Bostic expressed confidence in the economy, and in the Fed‘s position on monetary policy. “The market is ahead of where I am,” he said. “I would say I’m not expecting a rate cut to be imminent, certainly not be September. Things would need to happen in order for that to play out.”

5月20日，博斯蒂克表示他不认为央行降低利率，与市场相反期望。 Bostic表达了对经济以及美联储对货币政策立场的信心。 “市场领先于我，”他说。 “我会说我不期待降息迫在眉睫，肯定不会是九月。事情需要发生才能发挥作用。”

On June 25, Bostic said that he totally agrees with Chairman Powells view that the Federal Reserve will “act as appropriate to sustain the recovery.”

6月25日，博斯蒂克表示他完全同意鲍威尔主席的看法，即美联储将“酌情采取行动”维持经济复苏。

Bullard voted for a rate cut at the Federal Reserves monetary policy meeting on June 18-19. However, on June 25, he said he does not think the U.S. central bank needs to cut interest rates by a half-percentage point at its next meeting on July 30-31.

布拉德在6月18日至19日的美联储货币政策会议上投票决定降息。然而，在6月25日，他表示他不认为美国央行在7月30日至31日的下一次会议上需要降息半个百分点。

“Just sitting here today, I think 50 basis points would be overdone,” Bullard said in an interview with Bloomberg Television. “I dont think the situation really calls for that, but I would be willing to go 25 (basis points).”

布拉德在接受彭博电视采访时说：“今天坐在这里，我认为50个基点会过头了。” “我认为情况并不重要请求，但我愿意去25（基点）。”

Fed Speaker Impact

美联储议长影响

Bostic didnt see the need for a rate cut in late May, nor did he vote for one in June. Furthermore, he seems to be siding with Powell as both indicate policymakers will “act as appropriate to sustain the recovery.”

Bostic didn看不到5月下旬降息的必要性，他也没有在6月份投票。此外，他似乎支持鲍威尔，因为他们都表示政策制定者将“采取适当行动来维持经济复苏。”

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So we have to conclude that a dovish Bostic will be a surprise for traders. If he comes across as dovish then look for Treasury yields to fall along with the U.S. Dollar. His comments could also send gold and stocks higher.

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Bullard, on the other hand, is likely to maintain his dovish stance especially since he voted for the rate cut in June. He could be the source of heightened volatility if he shifts gears and hints at the need for a 50 basis point cut. His credibility could take a major hint if he suggests a rate cut in July is not necessary.

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