U.S. Treasury yields rose on Thursday as investors weighed the state of the U.S. economy after Federal Reserve Chairman Jerome Powell raised concerns about the inflationary and economic growth risks of the White House’s tariffs.
At 3:55 a.m. ET, the benchmark 10-year Treasury yield rose around 4 basis point to 4.319%. The 2-year Treasury yield was up over 2 basis points to 3.815%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
Investors are considering remarks made by Powell on Wednesday, when the central bank leader said the Fed could find itself in the sticky dilemma of trying to control inflation and support economic growth.
U.S. President Donald Trump’s tariffs have created uncertainty around the growth of the U.S. economy, with Powell saying that he expects a “rise in inflation” and decreased growth this year.
“We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension,” Powell said. “If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”
Deutsche Bank analysts said in a note that, despite the bleak picture, Powell doesn’t appear to be in a rush to react to economic challenges.
“His comments added to the sense that the Fed wouldn’t be in a rush to react to the weaker surveys of recent weeks,” the analysts said. “Moreover, he downplayed the need for any Fed market intervention, noting that markets remained orderly even if they were ‘struggling with a lot of uncertainty.'”
After strong retail sales data, investors will now await the release of the latest housing print and the weekly initial jobless claims on Thursday.