U.S. Treasury bond yields rose slightly, while market participants took a wait-and-see attitude ahead of Fed Chairman Jerome Powell's speech, which may clarify the prospects for monetary policy easing.
The yield on 5-year Treasury bonds increased by 1.7 basis points, reaching 3.925%, while the yield on 30-year bonds was 4.964% (+2.7 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, increased by 1.1 basis points to 3.863%, while the yield on 10-year bonds increased to 4.392% (+2.2 basis points).
As for Fed Chairman Jerome Powell's speech, it is scheduled for 12:30 GMT. Investors also remain cautious amid growing concerns over the Federal Reserve’s independence. Trump has repeatedly criticized Powell, with reports suggesting he nearly fired him last week. U.S. Treasury Secretary Scott Bessent further fueled uncertainty by suggesting a review of the Fed’s overall performance. Bessent also questioned the Fed’s decision not to lower interest rates this year, given that the U.S. has “seen very little, if any, inflation.”
While the Fed is expected to hold rates steady in July, markets anticipate possible cuts later this year. Goldman Sachs expects the Fed to begin a rate-cutting cycle in September, assuming inflation expectations remain under control.
As for the economic data, existing home sales data for June, as well as weekly initial jobless claims and new home sales in June, will be released later this week. In addition, a report on durable goods orders for the previous month will be released on Friday.