10-year Treasury yield is steady as Powell reiterates Fed is on hold because of tariffs

The 10-year Treasury yield was little changed Tuesday after comments from Federal Reserve Chair Jerome Powell on the impact of tariffs on U.S. monetary policy.

The benchmark yield was unchanged on the day at 4.226%. The 30-year bond yield was down 1 basis point at 4.761%. The 2-year yield was up more than 3 basis points at 3.754%.

One basis point is equal to 0.01%, and yields and prices share an inverse relationship.

“In effect we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Powell said at the European Central Bank's Forum on Central Banking in Portugal.

When asked if the Fed would have lowered rates again by not had U.S. tariffs not been unveiled, Powell said, “I think that's right.”

Investors also weighed new U.S. economic data that showed a smaller-than-expected contraction in the manufacturing sector. The ISM manufacturing index came in at 49.9 for June, above the Dow Jones consensus of 48.6. A reading below 50 indicates contraction.

More data is due later in the week , with June payroll data — a key economic indicator — expected on Thursday. Watchers will get a first glimpse of the health of U.S. employment through the release of ADP private payrolls on Wednesday.

Investors are also following the progress of President Donald Trump's “big, beautiful bill,” which overcame a crucial procedural obstacle in the U.S. Senate late Saturday, bringing the sweeping spending measure a step closer to becoming law.

The “big, beautiful bill” is set to be passed, said Vishnu Varathan, head of economics and strategy at Mizuho Securities. While it is projected to add $3.3 trillion in debt burden over a decade, softer Treasury yields may take some edge off, he added.