10-year Treasury yield sits below 1.50% as investors eye Fed Chair Powell’s Congress testimony

The 10-year U.S. Treasury yield sat below 1.50% on Tuesday, as investors awaited Federal Reserve Chairman Jerome Powell’s testimony to Congress on the central bank’s response to the coronavirus pandemic.

The yield on the benchmark 10-year Treasury note dipped one basis point to 1.475% by 1:15 p.m. ET. The yield on the 30-year Treasury bond was little changed at 2.105%. Yields move inversely to prices. One basis point is 0.01%.

Powell is set to speak before the House Select Subcommittee on Coronavirus Crisis at 2 p.m. ET.

In the prepared comments, which were released Monday evening ahead of the testimony, Powell said that while the “economy has shown sustained improvement,” it still faces continued threats from the Covid-19 pandemic.

“Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery,” Powell said. “Indicators of economic activity and employment have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades.

“Much of this rapid growth reflects the continued bounce back in activity from depressed levels,” Powell said.

The Fed chair also expects job gains to improve in coming months as vaccinations increase and inflation to fall back toward the longer-run goal, according to his prepared remarks.

Powell’s testimony follows the Fed’s policy meeting last week, in which it raised inflation expectations and signaled an interest rate increase could happen sooner than expected.

Chris Watling, CEO of Longview Economics, told CNBC’s “Squawk Box Europe” on Tuesday that the Fed had been “pretty resolute” about keeping monetary policy “looser for longer.”

However, he said that a tightening of the labor market was “clearly a possible candidate” to “upset this applecart.”

Auctions are due to be held Tuesday for $40 billion of 42-day bills and $60 billion of 2-year notes.

— CNBC’s Jeff Cox contributed to this market report.