U.S. Treasury yields were lower on Tuesday as investors weighed comments from Federal Reserve Chairman Jerome Powell on the outlook for the economy and interest rates.
At 6:15 a.m. ET, the yield on the 10-year Treasury was down by 4 basis points at 4.18%. The 2-year Treasury yield was last more than 3 basis points lower at 4.415%.
Yields and prices move in opposite directions and one basis point equals 0.01%.
On Monday, Powell said the central bank will not wait until inflation has reached its 2% target rate before cutting interest rates.
Waiting to cut rates until the target has been reached would mean “you’ve probably waited too long,” he said, explaining that the tightness of monetary policy would still be having an impact, and inflation would likely fall below 2%.
Powell, however, said the Fed is still looking for “greater confidence” that inflation will return to 2%.
“What increases that confidence in that is more good inflation data, and lately here we have been getting some of that,” he said.
Last week, June’s consumer price index unexpectedly reflected a 0.1% decline from the previous month and came in at 3% on an annual basis.
Traders were last still expecting the Fed to keep rates unchanged when it meets at the end of this month but are now pricing in a 100% chance of rates being cut in September, CME Group’s FedWatch tool showed.
As the week continues, several other Fed officials are set to make remarks. On Tuesday, investors will also be watching out for the latest retail sales data as well as import and export prices.
