U.S. Treasury yields were higher on Monday as investors weighed the path ahead for interest rates following comments from Federal Reserve Chair Jerome Powell.
At 4:45 a.m. ET, the yield on the 10-year Treasury was up by over six basis points to 4.0963%. The 2-year Treasury yield was last more than seven basis points higher to 4.4492%.
Yields and prices have an inverted relationship and one basis point equals 0.01%.
Investors considered the outlook for interest rates and awaited the fresh data that could provide hints about the state of the economy.
Powell told CBS on Sunday that the central bank would be careful when it comes to interest rate cuts and that policymakers were still looking for additional evidence of inflation returning to the Fed’s 2% target range.
Powell also indicated that the pace of rate cuts would likely be slower than markets are expecting, and reiterated comments he made after the Fed’s meeting last week saying that rate cuts are unlikely to begin in March.
At its meeting last week, the Fed kept interest rates unchanged for the fourth time in a row, but indicated that rate cuts would likely start this year.
Many investors have been hoping for the Fed to cut rates sooner rather than later as concerns about the impact of elevated rates on the economy have continued.
That comes despite signs of resilience, including in the labor market, with the January jobs report coming in stronger than expected on Friday. Nonfarm payrolls increased by 353,000 in the month, higher than the 185,000 estimated by economists previously surveyed by Dow Jones.
On the data front, ISM’s services purchasing managers’ index report for January is out Monday. Several Fed officials are also slated to speak throughout the week.
