Treasuries Move To The Downside Following Powell Speech

(RTTNews) - Treasuries regained ground after seeing initial weakness but once again moved to the downside over the course of the trading day on Monday.

Bond prices came under pressure later in the trading day, closing firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.3 basis points to 3.802 percent.

Treasuries moved back to the downside following remarks by Federal Reserve Chair Jerome Powell before the annual meeting of the National Association for Business Economics

The Fed chief suggested the central bank will continue to lower interest rates but stressing the downward path for rates is not on a preset course.

Powell said the decision to slash rates by half a percentage point earlier this month reflects the Fed's growing confidence that an appropriate recalibration of monetary policy will maintain strength in the labor market and keep inflation moving sustainably down to the 2 percent target.

"Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance," Powell said.

"But we are not on any preset course," he continued. "The risks are two-sided, and we will continue to make our decisions meeting by meeting."

Powell's remarks partly offset optimism the Fed will continue to lower interest rates aggressively in the coming months.

The Fed's next monetary policy meeting is scheduled for November 6-7, with CME Group's FedWatch Tool currently indicating a 65.3 percent chance the central bank will lower rates by 25 basis points and a 34.7 percent chance of another 50 basis point rate cut.

Looking ahead, trading on Tuesday may be impacted by reaction to reports on activity in the manufacturing sector and job openings.