'Powell's Hawkish Tone Falters' US Treasury Yields Weaken

Entering the 1.6% Range... Decline Widens After Powell's Remarks

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] U.S. Treasury yields fell after Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), mentioned that the U.S. economy has not yet fully recovered.

On the 23rd (local time), Powell appeared before the House of Representatives and stated, "Although the economy is recovering faster than generally expected, sectors severely impacted by COVID-19 remain vulnerable," emphasizing, "The unemployment rate does not accurately reflect the current situation."

He also assessed, "Inflation will rise for several years but will not spiral out of control. Sustained inflation is unlikely." He reiterated that there are tools available to manage inflation.

Following Powell's remarks, as of 3:30 p.m. that day, U.S. Treasury yields fell to 1.624%. Although yields touched the 1.7% level during the session, the decline deepened after testimonies from Chairman Powell and Treasury Secretary Yellen before Congress. Recently, Powell's comments have often caused yields to surge, but no sharp fluctuations were observed this time.

On the same day, lawmakers pressed Secretary Yellen on tax increases accompanying large-scale infrastructure investment plans. In response to questions about raising corporate taxes and tax rates on high-income earners, Secretary Yellen argued, "The infrastructure investment plan aims to secure economic competitiveness and productivity," adding, "Some increase in burden is necessary to cover related costs."

She also mentioned, "The Biden administration will not pursue policies that harm small businesses or the public."

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