U.S. Treasury Yields Extend Climb After Powell's Comments
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
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
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
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 email@example.com and Sebastian
Pellejero at firstname.lastname@example.org
(END) Dow Jones Newswires
March 04, 2021 16:04 ET (21:04 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.