Bond Market Eyes Powell for Direction After Historic Rout

​After one of the worst Treasury selloffs in over two decades, U.S. bond traders are turning to Federal Reserve Chair Jerome Powell for answers—and maybe a lifeline.

A modest rebound in Treasuries over the past three days is on shaky ground as investors wait for Powell’s Wednesday speech, hoping for signals on how the Fed will handle growing market turmoil. Trump’s surprise global tariffs, combined with recession fears and inflation jitters, have sent shockwaves through what was once the world’s safest asset class.

The 10-year Treasury yield has held near 4.33%, while the 2-year yield—more closely tied to Fed policy—has dipped slightly to 3.82%, helped by news that China may be open to trade talks. But the broader damage remains: Treasuries are no longer acting like the rock-solid hedge they once were.

Adding to the tension, the U.S. is set to auction $13 billion in 20-year bonds, a maturity that has struggled to find consistent buyers. Traders are watching this closely as a stress test for investor confidence.

To calm nerves, regulators are also discussing a rule change that could lower trading costs for banks and reduce the risk of liquidity freezes in the $29 trillion Treasuries market—a step welcomed after last week’s volatility caused long-bond prices to collapse so fast they briefly traded 1% cheaper than equivalent swaps.

Globally, the bond rally isn’t limited to the U.S. German yields fell, and UK gilts rallied following cooler-than-expected inflation data.

​Bottom line: Powell’s next words could be make-or-break for the bond market. Traders want to know: Will the Fed stay the course—or blink in the face of tariff-fueled chaos?