Investors are eagerly awaiting Federal Reserve Chairman Jerome Powell's speech in Jackson Hole on Friday as they search for direction on the future of US monetary policy.
All three indices are in route for their first positive week since the end of July, according to Refinitive.
The two-year and 10-year government rates were reversed just before Wednesday's closing clock. This means that the shorter dated bond yielded more than the longer dated one. It was the second time it happened this month, and a reverse yield curve has preceded every recession in modern times.
Bond yields rose on Thursday morning, relieving investors' attention. The 1
The minutes of the Fed meeting in July showed that the Fed saw the interest rate in July as an adjustment and wants to keep the options open for future interest rate cuts. The July course was the first since 2008. Powell speaks at 10 a.m. Friday.
So far, expectations for a September interest rate cut are still around 94%, somewhat lower than on Wednesday.
"If Powell refrains from signaling more relief is coming, he will risk getting the bond market overreacting and shattering government yields, possibly raising the argument that we may see negative interest rates in the end in America," said Edward Moya, senior market analyst at Oanda.
Investors caught a glimpse of financial data Thursday morning: unemployment claims and the IHS Markit purchasing responsible index for August.
Unemployed claims came in lower than expected at 209,000, showing that the labor market is still strong.  But PMI again pointed to weaknesses in the US industry.
The August production index fell to 49.9 – indicating a contraction, rather than an expansion of the sector. That's the lowest read in 119 months, according to Markit.
The Composite Index came in at 50.9, down from 52.6 in July, thanks to relative strength of business.