Treasury yields fell on Wednesday after Federal Reserve Chairman Jerome Powell said he sees "significant downside risks" amid the coronavirus pandemic and more stimulus may be needed to pull the U.S. economy out of the downturn.
Treasurys
The yield on the benchmark 10-year Treasury note fell 3 basis points to about 0.65%, while the yield on the 30-year Treasury bond was also down at 1.34%. Yields move inversely to prices.
Powell said Wednesday that the U.S. economy may need additional help to recover from the coronavirus crisis that caused "a level of pain that is hard to capture in words."
"While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks," Powell said in prepared remarks for a webcast event with the Peterson Institute for International Economics.
Powell added the central bank will not consider negative rates in salvaging the economic damage.
"I know there are fans of the policy, but for now it's not something that we're considering," the central bank leader said Wednesday. "We think we have a good toolkit and that's the one that we will be using."
Also on Wednesday, a measure of underlying U.S. producer prices fell more than expected in April as the economy reeled from restrictions imposed to contain the coronavirus.
The U.S. producer price index dropped 1.3% last month, more than the 0.5% decline expected by economists polled by Dow Jones. The reading came after data on Tuesday showed consumer prices dropped by the most on record in April.
White House medical advisor Dr. Anthony Fauci said Tuesday that a vaccine will be essential in stopping the coronavirus spread, but warned it will be awhile before a useful one is available. Fauci added the U.S. could face more "suffering and death" if states start to reopen too quickly.
House Democrats on Tuesday saw a $3 trillion-plus coronavirus relief package with funding for states, businesses, food support and families flatly rejected by Republican counterparts.
Auctions will be held Wednesday for $35 billion of 105-day Treasury bills, $40 billion of 154-day bills and $22 billion of 30-year bonds.