U.S. Treasury yields pull back from intraday high after Powell testimony

US Treasury bond yields peaked Tuesday after Federal Reserve Chairman Jerome Powell testified in Congress that the central bank was still a long way from deciding when to cut its asset purchases.

What are treasuries doing?

The yield on 10 year treasury bills
TMUBMUSD10Y, 1.361%
declined 1 basis point to 1.359% after rising 1.39% earlier in the day during the 2-year policy rate
TMUBMUSD02Y, 0.121%
was flat at 0.115%. The 30 year bond yield
TMUBMUSD30Y, 2.197%
gained 2.2 basis points to 2.203%.

Bond prices move in reverse to yields.

What drives Treasurys?

The bond markets saw testimony from Fed Chairman Jerome Powell as he stood before Congress on Tuesday. Powell said the Fed will “communicate clearly” before the pace of its bond purchases changes.

Echoing other senior Fed officials, Powell added that rising long-term bond yields “are a declaration of confidence from the markets that we will see a robust and ultimately full recovery.”

His remarks helped push long-term bond yields off their highs as burgeoning inflation and growth expectations test the limits of the Fed’s new inflationary framework.

As part of the strategy, the Fed would allow inflation to sustainably exceed its inflation target before withdrawing its supportive policy.

See:: Rising bond yields around the world are causing central banks trouble, warns the economist

In US economic data a measure of consumer confidence for February rose to 91.3 from 88.9 in the previous month.

A portion of the bond offering also hit the market, and Treasury sold $ 60 billion worth of biennial notes that afternoon.

What did the market participants say?

“It wasn’t easy for Chairman Powell today. But when I look at the price history I don’t think he will be terribly disappointed. I’m not sure there was any ambition to really bully the market, so I think this is an acceptable result, ”said Padhraic Garvey, ING’s regional director of research for America, in an interview.

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