The US Treasury yields witnessed a notable increase on Tuesday, as the 2-year yield briefly surpassed the 5% mark, following comments made by Federal Reserve Chair Jerome Powell. Powell expressed his concern about the lack of progress in inflation, suggesting that the central bank may take more time in lowering interest rates than previously expected.

The 2-year Treasury yield experienced a sharp rise, reaching 4.981% after a gain of more than 4 basis points. Similarly, the yield on the 10-year Treasury increased by over 3 basis points to reach 4.659%. As a reminder, yields and prices move in opposite directions, with one basis point being equivalent to 0.01%.

Speaking at the Washington Forum on the Canadian Economy, Powell highlighted the absence of further progress in achieving the central bank's 2% inflation target, citing recent data demonstrating robust economic growth and ongoing strength in the labor market. His comments align with those of other central bank officials, including San Francisco Federal Reserve Bank President Mary Daly, who recently stated that there is currently "no urgency" for the Fed to implement interest rate cuts.

Investors also considered recent economic indicators, such as the March retail sales figures which exceeded expectations, indicating resilience in consumer spending despite persistent inflation. Meanwhile, geopolitical tensions escalated after Iran's attack on Israel over the weekend, prompting observers to await Israel's response, while world leaders called for calm and restraint.

The impact of these developments is reflected in the reaction of the Treasury market, with yields rising in response to Powell's concerns over inflation. As investors continue to monitor the situation, they remain cautious about the potential implications for the US economy and monetary policy moving forward.