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US Treasury yields tick upward after Powell confirmation hearing, tax bill progress

U.S. government debt yields ticked upward on Tuesday after the confirmation hearing of Federal Reserve chairman nominee Jerome Powell as traders bet on a stable market and similar policies under the new chief.

The Senate Budget Committee also approved the Republican tax bill, a procedural step ahead of a full chamber vote scheduled for later this week.

The yield on the benchmark 10-year Treasury note rose to 2.342 percent at 2:57 p.m. ET, while the yield on the 30-year Treasury bond was also higher at 2.771 percent. Bond yields move inversely to prices.

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US 1-YR
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Tuesday was a big day for Fed chair nominee Jerome Powell. The Senate Banking Committee grilled the central banker on a slew of topics at his confirmation hearing this morning with inflation as a key topic.

The chair nominee was asked for his views on state of the economy as well as for any concerns he may have over stagnant inflation. Current Fed Chair Janet Yellen has consistently called lethargic inflation transitory, but with a third rate hike expected in December, Powell will have to justify any hawkish plans as price increases continue to miss the 2 percent goal.

"Tailoring of regulations is one of our must fundamental responsibilities," he said during the session. "We want regulations to be the most intense, the most stringent for the very largest, most complex institutions and want it to decrease in intensity and stringency as we move down through the regional banks and the community banks. This is something we strive to achieve. We're taking a fresh look at that now."

Powell — a former private equity banker and a member of the Fed since 2012 — had the unenviable task of appealing to both Democrats and Republicans during the question-and-answer session. Democrats raised concerns over his relatively lax attitude toward banking regulations, while Republicans were eager to see if the chair nominee will hasten rate hikes should GOP tax stimulus materialize.

Meanwhile, Democratic leaders Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi canceled a meeting with President Donald Trump. The top politicians were to meet with Trump to discuss preventing a government shutdown, but abruptly called off the meeting after the president tweeted that he doesn't see clear path to "deal."

The Senate is expected to vote on a bill aimed at reforming the U.S. tax code on Thursday. The Senate Budget Committee approved the GOP tax bill Tuesday, sending the proposal to the full chamber.

Investors have been eagerly awaiting tax reform since the election in 2016, yet doubts over whether the Republican-led Congress could achieve this before the year is out continues to weigh on sentiment.

If the Senate bill is approved, then a joint bill with the House would then have to be created. The House passed a bill on a few weeks back, to cut taxes on businesses and individuals, but it differs from the Senate bill in some key areas.

The Treasury Department auctioned $28 billion in 7-year notes at a high yield of 2.23 percent. The bid-to-cover ratio, an indicator of demand, was 2.36. Indirect bidders, which include major central banks, were awarded 58.6 percent. Direct bidders, which includes domestic money managers, bought 13.7 percent.

—CNBC's Fred Imbert and Jeff Cox contributed to this report