Cautious Risk-On Ahead Weekend, Dallas Fed Kaplan Eyes Delta

Rates traded higher briefly early Friday, pared gains into the equity open and continued to trade weaker into the close. Dearth of economic data with no obvious headline driver or block posts, two-way positioning and option-tied hedging noted ahead Dallas Fed Pres Kaplan event at Texas Tech business college.

• After calling for taper annc in Sep/begin in Oct last week, Kaplan (noted hawk, voter in 2022) offered caveats based on Covid-Delta variant: A MORE NEGATIVE EFFECT ON GDP GROWTH COULD CAUSE ME TO ADJUST MY VIEWS - RTRS.
• US Pres Biden's brief on Afghanistan evacuation deemed underwhelming but not market moving. Latest weekly approval rating from Ipsos shows President Biden's disapproval rating higher than his approval rating for the first time in his presidency. Biden's disapproval rating rose to 49%, from 43% last week. His approval rating fell to 46%, from 50% previously.
• Focus on next week's Markit PMIs (Mon), New Home Sales (Tue), Durables (Wed) and of course the KC Fed's annual economic symposium in Jackson Hole WY next Friday. Scheduled events/speakers expected to be released appr 1900ET Thursday evening.
• Expect volumes to surge as Tsy Sep/Dec quarterly futures continues, first notice Tuesday, Aug 31 when Dec takes lead quarterly position. Sep Tsy optyions expire next Friday as well.
• The 2-Yr yield is up 0.5bps at 0.2241%, 5-Yr is up 1.8bps at 0.785%, 10-Yr is up 1.7bps at 1.26%, and 30-Yr is up 0.3bps at 1.8735%.