U.S. Treasury yields rose for the second consecutive day as the market awaits the speech by Waller at Jackson Hole.

U.S. Treasury yields rose for the second consecutive trading day on Thursday as investors awaited an important speech from Federal Reserve Chairman Waller on Friday at the Jackson Hole Global Central Bank Annual Symposium. The market expects that, in light of persistently high long-term U.S. Treasury yields and inflationary pressures, Waller may signal a hawkish policy stance to stabilize the long end of the bond market. On Thursday, yields across various maturities of U.S. Treasuries generally increased by about 1 to 2 basis points, with the rise in long-term yields being particularly notable. Recently, long-term U.S. Treasuries have been under pressure as investors remain cautious about the U.S. inflation outlook and ongoing fiscal pressures. The yield on the 30-year U.S. Treasury rose to around 5.2%. Earlier this month, this yield briefly reached its highest level since 2007, prompting the U.S. Treasury to announce an expansion of long-term Treasury buyback programs to alleviate selling pressure in the long-end market. Despite the Treasury's actions, long-term yields remain elevated, indicating that market concerns over the U.S. fiscal position and inflation risks have not fully subsided. Against this backdrop, Waller's speech at Jackson Hole on Friday has become one of the most closely watched events in global financial markets this week. Torsten Slok, Chief Economist at Apollo Global Management, stated in an interview that Waller might deliver an economic outlook with "hawkish tones" to prevent further increases in long-term U.S. Treasury yields. Slok believes that if Waller does not provide the market with a clear policy framework or forward guidance, long-term rates could face significant upward risks. Before Waller's speech, Kansas City Federal Reserve President George noted on Thursday that the current monetary policy is not imposing constraints on the U.S. economy. The Federal Reserve maintained the federal funds rate target range at 3.5% to 3.75% during its recent policy meeting. Currently, the interest rate futures market anticipates that the Federal Reserve may implement another 25 basis points hike before the end of this year. Thus, Waller's comments on current interest rate levels, inflation risks, and the direction of future monetary policy will directly impact the market's judgment regarding the timing of the next rate hike. However, the short-term interest rate market indicates that not all investors believe the Fed will take action soon. On Thursday, a significant transaction in federal funds futures occurred, with one or more traders buying about 45,000 October federal funds futures contracts. This transaction aligns with expectations that the Fed will keep rates unchanged before December. As of 9:30 AM New York time, this trade accounted for about one-third of the total volume for that contract on the day, indicating that some funds are betting on no rate hikes in the near term. Meanwhile, the market still expects a roughly one-third probability of a 25 basis point rate increase by the Fed in September, reflecting significant divergence among investors regarding the short-term policy path. U.S. labor market data released on Thursday also provided some support for Treasury yields. The latest figures showed that initial claims for unemployment benefits decreased from the previous week, indicating that the labor market still has some resilience. Given the Fed's ongoing focus on inflationary pressures, a relatively robust employment environment also suggests that the necessity for a swift pivot to an accommodative policy is limited in the near term. Overall, as the 30-year U.S. Treasury yield rises back to 5.2%, the market focus has shifted to Waller's speech at Jackson Hole on Friday. Investors are particularly interested in whether he will stabilize the long-term Treasury market with hawkish policy statements and whether he will provide new clues about the rate hike path for September or before the end of the year.