By Sam Goldfarb and Sebastian Pellejero 

Selling in U.S. government bonds gained steam Thursday after Federal Reserve Chairman Jerome Powell said the central bank's current policy stance is appropriate, disappointing some investors who had hoped that he might signal greater concern with the recent increase in Treasury yields.

The yield on the 10-year Treasury note, which rises when bond prices fall, settled at 1.547%, according to Tradeweb, up from 1.479% before the start of Mr. Powell's interview at The Wall Street Journal Jobs Summit and 1.469% Wednesday.

Mr. Powell said the recent increase in Treasury yields had caught his attention and suggested the Fed might intervene if overall financial conditions tighten much further. But he stopped short of signaling that the Fed was close to buying more long-term Treasurys each month in an effort to contain yields, as some investors had thought was possible.

"The market had clearly set itself up for more guidance than the Fed's prepared to give right now," said Jim Vogel, interest rate strategist at FHN Financial.

Before Thursday, Treasury yields had logged one of their sharpest increases in recent years, with the 10-year yield having climbed from about 0.9% at the start of the year.

Investors and Fed officials alike say that rising yields generally reflect a brightening outlook, thanks to the distribution of coronavirus vaccines and large amounts of government stimulus.

Higher yields, though, could also drag on the economy by increasing borrowing costs for individuals and businesses, leading some to think that the Fed might try to stop them from rising further.

Stock prices also fell after Mr. Powell's remarks, reflecting concerns about the bond market.

Without intervention, many analysts believe that yields could keep climbing this year, with the 10-year yield approaching 1.75% or even 2% as investors guard against the possibility that the Fed could start lifting short-term interest rates within the next few years.

Some, though, think yields are already higher than they should be, arguing that long-term forces are likely to contain inflation and make it difficult for the Fed to raise rates.

Write to Sam Goldfarb at sam.goldfarb@wsj.com and Sebastian Pellejero at sebastian.pellejero@wsj.com

(END) Dow Jones Newswires

March 04, 2021 16:04 ET (21:04 GMT)

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