U.S Bonds Head for First Gain in Five Days With Eyes on Powell

U.S. Treasuries broke a losing streak on Tuesday, posting their first gains in five sessions as investors braced for a busy lineup of Federal Reserve speakers that could hint at further interest-rate cuts.

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Bonds advanced across maturities, with 10-year yields slipping two basis points to 4.13%. The move followed several days of weakness, as Fed officials struck a cautious tone last week and reinforced it with remarks on Monday, leaving markets searching for clarity on the policy path.

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That clarity may arrive soon. On Tuesday, Fed Chair Jerome Powell is scheduled to speak, along with policymakers Austan Goolsbee, Michelle Bowman, and Raphael Bostic. With the outlook for Fed policy still clouded, investors are gravitating toward strategies designed to deliver returns even if unexpected economic shifts delay or derail additional easing.

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“Powell will hopefully cut through the uncertainty after framing last week’s move as a ‘risk management’ cut,” said Michael Brown, senior research strategist at Pepperstone. He added that the Treasury’s two-year bond auction earlier in the day would likely be met with strong demand.

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Last week, Powell delivered the Fed’s much-anticipated rate cut, describing it as an insurance move aimed at balancing signs of labor-market softening against the risk of inflation picking back up. Since then, Fed officials have sent mixed messages about whether more reductions are on the table.

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St. Louis Fed President Alberto Musalem said he sees limited scope for further cuts, while newly appointed Fed Governor Stephen Miran — in his first public remarks since joining the board under President Donald Trump — argued that policy remains overly restrictive.

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Investors are also eyeing incoming economic reports for additional guidance. Tuesday brings PMI data and the Richmond Fed’s manufacturing index, while GDP and the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) index, arrive later in the week. Each release could shape expectations around the Fed’s next moves.

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“Employment is slowing, and perhaps more critically, the neutral rate is far below where we are today,” said Bruce Richards, chief investment officer at Marathon Asset Management, in an interview with Bloomberg TV. He forecast another 125 basis points of rate cuts ahead. “The Fed still has a lot more work to do.”

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