Line of Credit 
PrintTREASURIES-US yields edge higher as focus shifts to Fed's Powell's likely comments
BY Reuters | ECONOMIC | 01/28/25 04:01 PM EST*
US data mixed overall; marginal impact on Treasuries
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US rate futures price in two rate cuts in 2025
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US seven-year note auction was well received
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Markets look to Fed's Powell's remarks for clues on easing pace
(Adds new comment, graphic, results of seven-year note auction, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 28 (Reuters) - U.S. Treasury yields drifted higher on Tuesday, recovering from multi-week declines in the previous session, as stocks stabilized following Monday's bloodbath and investors looked ahead to the Federal Reserve's comments after its two-day policy meeting which ends on Wednesday.
Shares on Wall Street rose, with the Nasdaq sharply higher
and Nvidia
In afternoon trading, the benchmark 10-year Treasury yield rose 2.1 basis points (bps) to 4.549% after falling to a four-week low on Monday. Both 20-year and 30-year bond yields recovered from four-week troughs as well.
On the front-end of the curve, the two-year yield, which is typically tied to Federal Reserve policy expectations, edged up 1.1 bps to 4.207%. On Monday, the two-year yield dropped to seven-week lows. The three-year, five-year , and seven-year yields also rose from their lowest levels in seven weeks.
Bond investors are now prepping for the U.S. central bank statement and Fed Chair Jerome Powell's press briefing on Wednesday.
The Federal Open Market Committee is widely expected to keep its benchmark overnight interest rate in the 4.25%-4.50% range at the end of its two-day policy meeting. Powell will likely strike a cautious tone in his post-meeting press conference and keep the central bank's options open to allow policymakers time to assess how President Donald Trump's administration will reshape the fiscal landscape.
"This rates selloff is likely due to uneasiness about what Powell will say at the press conference," said Vinny Bleau, director, fixed income capital markets, at Raymond James in Memphis.
"Everybody knows that the Fed is not doing anything. It's more about getting insight on how many cuts the Fed is thinking about. The market a couple of weeks back has been pricing in just one cut, now we're back to two."
The U.S. rate futures market has priced in about 49 bps in cuts this year, or two rate reductions of 25 bps each, amid the tech meltdown, little changed from late on Monday, according to LSEG calculations.
The Fed's own rate forecast, which was released in December, called for two quarter-percentage-point cuts next year, with the benchmark lending rate ending 2025 in the 3.75%-4.00% range.
U.S. economic reports on Tuesday, meanwhile, were mixed with durable goods new orders falling 2.0% last month, well below expectations and the lowest since June.
U.S. consumer confidence also weakened, falling for a second straight month in January on renewed concerns about the labor market and inflation. The Conference Board's consumer confidence index fell to 104.1 this month from an upwardly revised 109.5 in December.
U.S. home prices, on the other hand, were 0.3% higher in November and up 4.2% in the 12 months through November based on the Federal Housing Finance Agency home price index.
Also on Tuesday, the Treasury's auction of $44 billion in seven-year notes was well-received. It priced at 4.457%, below the rate forecast at the bid deadline, suggesting stable demand.
The bid-to-cover ratio was 2.64, slightly down from December's level of 2.76, but higher than the 2.60% average. The sale followed Monday's mixed auction results for the U.S. two-year note, which came out on the softer side, and that of the five-year note, which was solid.
The U.S. Treasury yield curve, meanwhile, steepened marginally on Tuesday, with the gap between two-year and 10-year Treasury yields at 34 bps, compared with 33 bps late Monday.
Yield curves typically steepen, where yields on longer-dated Treasuries are higher than short-term maturities, in an easing cycle because rates on the front end are generally tethered to Fed policy moves.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Aurora Ellis)
