Treasury Yields Dip Despite Powell’s Cautious Stance on Rate Cuts

Federal Reserve Chair Jerome Powell reiterated that the U.S. central bank is not rushing to lower interest rates, emphasising the need to monitor the effects of proposed tariffs. Speaking on Tuesday, Powell highlighted the Federal Open Market Committee’s (FOMC) focus on maintaining stable long-term inflation expectations to prevent temporary price surges from fuelling persistent inflation. Despite his cautious remarks, U.S. Treasury yields declined, suggesting markets anticipate swifter rate reductions than Powell’s statements imply.

The 10-year Treasury yield fell by 3.1 basis points to 4.291%, while the 2-year yield dropped 1.4 basis points to 3.815%. The 30-year yield also eased by 2.7 basis points to 4.832%. Yields and bond prices move inversely, and one basis point equals 0.01%. Market analyst Andrew Brenner from NatAlliance noted that bond markets seem to be signalling expectations of earlier rate cuts, contrasting with Powell’s wait-and-see approach.

Traders also monitored a tentative ceasefire between Iran and Israel, which briefly faltered as both sides exchanged nonlethal rockets. U.S. President Donald Trump announced the truce on social media, urging compliance. Despite initial violations, the ceasefire appeared to stabilise, potentially influencing market sentiment. Earlier yield increases followed reports of Iran’s missile activity, but the de-escalation contributed to the subsequent decline in yields.