Following the rebound seen in the previous session, treasuries showed a substantial move back to the downside during trading on Monday.
Bond prices came under pressure early in the day and slid more firmly into negative territory as the session progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 16.7 basis points to 2.315 percent.
The ten-year yield more than offset the pullback seen last Friday, ending the session at its highest closing level since late May 2019.
The sharply lower close by treasuries came following comments from Federal Reserve Chair Jerome Powell, who suggested the central bank might raise interest rates more aggressively if inflation remains too high.
“We will take the necessary steps to ensure a return to price stability,” Powell said in remarks to the National Association for Business Economics. “In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so.”
He added, “And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”
The comments from Powell come after the Fed raised interest rates by 25 basis points last week and signaled more rate hikes are likely in the coming months.
Traders also kept an eye on the latest developments in Ukraine, with peace talks with Russia failing to make substantial progress on key issues.
Following a quiet day on the U.S. economic front, the economic calendar remains relatively light on Tuesday.