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US Bonds Halt Losses Since Fed Meeting as Focus Turns to Powell

(Bloomberg) -- Treasuries headed for their first day of gains in five sessions as traders anticipated a slew of Federal Reserve speakers may signal more interest-rate cuts are coming.

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US bonds rose across the curve, with 10-year yields trading two basis points lower at 4.13%. That comes after the market has been under pressure since officials last week expressed a cautious approach to further easing, with comments on Monday reiterating that tone.

Investors are looking for greater clarity given the number of Fed speakers on Tuesday, including Chair Jerome Powell and policymakers Austan Goolsbee, Michelle Bowman and Raphael Bostic. Uncertainty around the path forward for the Fed is high and investors have been leaning into bets that are likely to pay off even if rate cuts get knocked off course by surprising turns in the economy.

“Powell will, hopefully, clear up some of the confusion around having framed last week’s cut as a ‘risk management’ move,” said Michael Brown, senior research strategist at Pepperstone. He adds a sale of two-year US bonds earlier in the session is likely to be “taken down relatively well.”

When Powell delivered a highly anticipated rate reduction last week, he characterized it as a “risk management” cut and underscored the need to balance cracks in the job market against the risks of rising inflation.

Since the decision, officials have given mixed signals on the timing and likelihood of more easing. The Fed’s Alberto Musalem said he saw limited room for more cuts, while Stephen Miran said policy remains too tight in his first speech since being appointed to the central bank by President Donald Trump.

Focus now turns to PMI data and the Richmond Fed manufacturing index on Tuesday for evidence of a weakening US economy, with investors also awaiting the release of GDP and PCE data later in the week.

“Jobs are slowing and more importantly the neutral rate is much lower than the rate we have today,” Bruce Richards, chief investment officer at Marathon Asset Management, said in an interview on Bloomberg TV, adding that he expects 125 basis points of additional rate cuts. “They have a lot more to go.”