U.S. long-term Treasury bonds face further sell-off risks due to the lack of clear guidance.

This week, bond investors will closely monitor the speech by Federal Reserve Chair Walsh at Jackson Hole. Markets are looking for his approach to addressing persistent inflation and fiscal issues, with long-term Treasury bonds facing the risk of further sell-offs. Since taking office in May, Walsh has rarely offered forward-looking policy guidance. His speech following the last monetary policy meeting triggered a massive bond market sell-off, underscoring the market’s high sensitivity to his upcoming speech this Friday. Molly Brooks, U.S. rates strategist at TD Securities, said: "I think if he continues to withhold more information as he has done, the market will be disappointed, which could further exacerbate the recent sell-off in long-term Treasuries." Kathy Bostjancic, chief economist at Nationwide, said factors weighing on the bond market remain, including fiscal concerns, inflation, and uncertainty over the Fed’s policy responses. Dhiraj Narula, rates strategist at HSBC, noted this gives Walsh an opportunity to reassure investors by clarifying his policy outlook. He said: "In our view, if Chair Walsh can offer some assessment of underlying inflation pressures, that could be enough to lower the term premium tied to uncertainty."