U.S. Treasury yields declined on Tuesday as investors awaited fresh comments on the outlook for the economy and monetary policy from Federal Reserve Chairman Jerome Powell.
The yield on the 10-year Treasury was down over 5 basis points to 3.93%. The 2-year Treasury was trading at 4.863% after falling about 3 basis points.
Yields and prices have an inverted relationship. One basis point equals 0.01%.
Fed Chairman Powell is due to give testimony about the state of the U.S. economy before Congress on Tuesday and Wednesday. Investors are expecting to gather fresh insights into the central bank’s expectations for inflation and its monetary policy path from his comments.
The Fed has been implementing policy measures, including eight consecutive interest rate hikes since March 2022, as it fights to cool the economy and ease inflation.
Concerns about the pace of rate increases dragging the U.S. economy into a recession have spread among investors and prompted many to hope for the Fed to pause rate hikes this year.
In recent weeks, Fed officials have hinted that rates could go higher still and remain elevated for longer. That comes as the latest round of inflation data suggested that pressures from rising prices is continuing.
Both wholesale and consumer inflation prints increased for January, coming in higher than expected on a monthly basis, as did January’s personal consumption expenditures price index reading. The latter is one of the Fed’s favored inflation gauges.
No key economic data is due Tuesday. Later in the week, fresh labor market data is expected, including February’s jobs report on Friday.
