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Market Recap
U.S. Treasuries traded with volatility on August 21 as investors digested conflicting economic signals. The 10-year yield closed near 4.33%, while the 30-year hovered around 4.9%, both modestly higher than the prior day. Trading volumes remained subdued ahead of the Jackson Hole symposium.

Key Developments

• Philadelphia Fed Manufacturing Index (Aug): Fell sharply to -0.3 vs. expectations of 6.8, signaling weakening regional manufacturing momentum.
• Initial Jobless Claims: Rose to 235,000 (+11k from prior week), pointing to labor market softening.
• Short-term Bill Auction: 8-week T-Bill cleared at 4.22%, reflecting strong demand at the front end despite looming Fed cut expectations.
• Yield Curve: Long-end yields pushed slightly higher, while front-end rates remained anchored, underscoring the market’s split view between slowing growth and policy normalization.

Market Sentiment

• Investors remain cautious, with activity muted as they await Fed Chair Jerome Powell’s Jackson Hole speech.
• The symposium is expected to provide crucial guidance on the Fed’s stance into Q4, particularly regarding the September meeting.

Bottom Line
Mixed macro data left Treasuries oscillating but biased higher. Weak manufacturing and rising claims underscored economic fragility, yet yields stayed firm as traders positioned ahead of Powell’s guidance at Jackson Hole.