WASHINGTON (dpa-AFX) - Following the lackluster performance seen in the previous session, treasuries moved to the upside over the course of the trading day on Tuesday.
Bond prices showed a lack of direction early in the session but moved to the upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 4.120 percent.
The strength that emerged among treasuries came as digested remarks by Federal Reserve Chair Jerome Powell at an event in Rhode Island.
Treasuries have benefitted from their appeal as a safe haven in reaction to Powell's comments about the labor market, as he noted the downside risks to employment have risen.
'There has been a marked slowing in both the supply of and demand for workers-an unusual and challenging development,' Powell said.
While noting risks to employment have risen, Powell also said the near-term risks to inflation are tilted to the upside, which he described as a 'challenging situation.'
'Two-sided risks mean that there is no risk-free path,' Powell said. 'If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2 percent inflation.'
'If we maintain restrictive policy too long, the labor market could soften unnecessarily,' he continued. 'When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate.'
The advance by treasuries also came as Powell described equity prices as 'fairly highly valued' following the recent run to record highs, contributing to weakness on Wall Street.
A report on new home sales may attract some attention on Wednesday, although trading activity may be somewhat subdued ahead of the release of more closely watched data later in the week.
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