(Bloomberg) -- Treasuries fell as traders anticipate that Federal Reserve Chair Jerome Powell will reiterate that US interest rates are on hold in congressional testimony Tuesday.
Long-maturity yields rose as much as four basis points, with the 10-year note's stalling at around 4.53%. A gauge of the dollar held steady after two days of gains.
With Powell slated to appear before the Senate Banking Committee at 10 a.m. in Washington, Cleveland Fed President Beth Hammack, in prepared remarks for an event in Lexington, Kentucky, said it's appropriate to keep interest rates steady for "some time" while policymakers await further downward progress on inflation and analyze the economic effects of new government policies.
Her remarks echoed the message Powell delivered Jan. 29, when the Fed paused after cutting rates three times last year. Treasuries have fallen in recent sessions as uncertainty around US President Donald Trump's trade levies clouds the economic outlook, and Powell will likely face questions on their potential impact to growth and inflation.
"Powell is likely to acknowledge the strength of the US economy, but also the risks on inflation," said Mohit Kumar, a strategist at Jefferies, anticipating a repeat of the last Fed press conference. "We maintain the view of range-bound rates."
Money markets held bets for around 36 basis points of easing from the US central bank by year-end. Inflation data out Wednesday could offer further evidence of a buoyant economy, after a solid January jobs report.
Bond traders will also be watching Treasury auctions beginning Tuesday with $58 billion of three-year notes, followed by 10- and 30-year issues over the subsequent two days. Analysts anticipate that yields will remain elevated until there's a lot more clarity on where the economy is heading.
"With the new administration's policies so uncertain, and so likely to change, the Fed can't really be expected to plot a clear way forward," said Steven Barrow, head of G-10 strategy at Standard Bank.
(Adds Cleveland Fed President Hammack's comments in third paragraph and updates yield levels.)
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