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At 10 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 2.645 percent, while the yield on the 30-year Treasury bond was also lower at 3.018 percent.
"While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals," Powell said in his prepared remarks to the Senate Committee on Banking, Housing and Urban Affairs. "Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year."
Powell will also take questions from U.S. lawmakers, who are likely to grill the central banker on the economy, interest rates and the balance sheet. Though the Fed adopted a more cautious stance on future interest rate hikes last month, Powell and his colleagues have spent the last few months editing their rhetoric.
In October, Powell said the central bank was "a long way" from a neutral overnight lending rate, and in December commented that the process of reducing the balance sheet was on "autopilot." Those comments appeared to spook the markets throughout the final month of 2018 until the Fed chair and others soften their stance and suggested a more data-dependent path forward.
"I hope he continues the rhetoric of patience set out in the FOMC's meeting minutes last week," said Gary Pollack, head of fixed-income trading at Deutsche Bank Private Wealth Management. "I fear that he went too far back in January and he might try to walk back that dovish tone."
"The bond market is telling us that they expect the economy to be slow going forward and inflation to remain very low," Pollack added.
His mandated remarks this week — first before the Senate Banking Committee on Tuesday, then a day later before the House Financial Services Committee — allow him to revisit his prior guidance and inform lawmakers of the Fed's plans.
Bond purchases were also buoyed Tuesday morning after weaker-than-expected housing starts data. Data released by the Commerce Department showed housing starts fell 11.2 percent in December and reached their lowest level since September 2016. Home prices also rose in December at their slowest pace August 2015, according to the S&P Case-Shiller index.
Consumer confidence increased in February to 131.4 from 121.7 in January, the Conference Board said. Meanwhile, the U.S. Treasury is set to auction $26 billion in 52-week bills and $32 billion in 7-year notes on Tuesday.
— CNBC's Jeff Cox and Sam Meredith contributed reporting.