10-Year Treasury Yields Slip as Markets Brace for Fed Decision Amid Trump-Powell Tension
The yield on the 10-year U.S. Treasury note eased slightly on Tuesday, falling over two basis points to 4.342%, as investors exercised caution ahead of the Federal Reserve’s key policy meeting scheduled for July 29-30. The 2-year Treasury yield also dipped to 3.833%, and the 30-year yield declined to 4.911%, reflecting broader bond market calm before potential policy shifts. A basis point equals 0.01%, and bond yields move inversely to prices.
Markets are widely expecting the Fed to maintain its current interest rate target of 4.25%-4.5%, with CME FedWatch showing over 95% odds against a rate cut next week. Investors remain attentive to both the Fed’s inflation and employment mandates and the political pressure mounting around the central bank’s leadership, particularly from President Donald Trump, who has criticized Fed Chair Jerome Powell’s performance for months.
Treasury Secretary Scott Bessent sought to calm markets by affirming that Powell does not need to resign, though he emphasized a broader institutional review of the Federal Reserve. Drawing comparisons to oversight practices in aviation, Bessent suggested that if the Fed were the FAA, its recent errors would demand a reassessment of its effectiveness and structure.
Market sentiment was buoyed slightly by the apparent resolution of political uncertainty. Dean Smith, chief strategist at FolioBeyond, described the drop in yields as a “relief rally,” as it became clear that Powell will likely remain in his role through the end of his term. Trump’s statement later in the day seemed to support this, as he acknowledged Powell’s continued leadership until his term expires in eight months, despite reiterating his dissatisfaction.
With limited economic data released this week, traders are shifting their focus to key indicators due later: June existing home sales (Wednesday), initial jobless claims and new home sales (Thursday), and durable goods orders (Friday). These reports could offer further insight into economic resilience and shape expectations ahead of the Fed’s highly anticipated rate announcement.
Source: cnbc