10-year yield falls below 2.1% as investors digest key Fed speeches, eye North Korea

U.S. government debt yields fell on Tuesday as investors digested key Fed speeches and watched North Korea after the country's most powerful nuclear test.

The yield on the benchmark 10-year Treasury note sat lower at around 2.075 percent at 2:46 p.m. ET, falling below the key level of 2.1 percent. The yield on the 30-year Treasury bond was down at 2.693 percent. Bond yields move inversely to prices.

Earlier, the 10-year note hit a low of 2.079 percent, its lowest level since November 2016, when it yielded as low as 1.991 percent.


While the European Central Bank meeting on Thursday is set to put investors worldwide on edge, three leading members from the U.S.' central bank are delivered remarks independently on Tuesday.

In a dovish speech after months of weak inflation readings, Fed Governor Lael Brainard said the U.S. central bank should go so far as to make it clear it is comfortable pushing prices modestly above the Fed's 2-percent target.

"We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target," Brainard, a permanent voter on monetary policy, said in a speech in New York.

Later in the day, Minneapolis Fed President Neel Kashkari spoke at the Carlson School of Management in Minneapolis, adding that the Fed rate hikes may be slowing inflation, wage growth, and job growth.

"There may be a lot more slack in the labor market than we appreciate," Kashkari said. "The Fed may have allowed inflation expectations to drift lower."

The Dallas Business Club will host a conversation with Dallas Fed President Robert Kaplan in the late afternoon in Dallas.

Investors will be watched each speech closely to see if any Fed members comment on the state of the U.S. economy, after nonfarm payroll data last week showed that the U.S. economy had added 156,000 jobs in August, a figure which was below market expectations.

International politics is also at the front of investors' minds, as markets worldwide show signs of concern with regards to North Korea.

On Sunday, North Korea conducted its sixth and most powerful nuclear test to date, which the country claimed was of an advanced hydrogen bomb for a long-range missile.

A hydrogen bomb is much more powerful than the simpler types of atomic weapons tested by North Korea five times previously, or the bombs dropped on Japan during World War II.

The news was met with condemnation from across the globe, with the G-7 releasing a statement on Monday which said that the leaders condemned the new nuclear test by North Korea "in the strongest possible terms."

Meanwhile in the States, the White House stated on Monday that "all options to address the North Korean threat are on the table," according to Reuters.

The repercussions of Hurricane Harvey continue to leave its mark on markets, with investors wondering how much damage the natural disaster will have on the energy sector.

Oil prices edged higher on Tuesday however, with U.S. crude and Brent both trading up in morning trade.

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