Yields showed little reaction to the data, which showed new orders for U.S.-manufactured goods fell in January as civilian aircraft bookings tumbled, but increases in machinery and other products hinted that manufacturing could be stabilizing.
Powell is set to give his semiannual monetary policy testimony before the Senate Banking, Housing and Urban Affairs Committee at 10 a.m. EST (1500 GMT) on Tuesday. Investors will look for insights as to how aggressive the U.S. central bank will be in raising interest rates.
Yields have steadily climbed in recent weeks after the jobs report for January and other data pointed to a labor market that remains tight, which increased expectations the Fed will have to continue to hike rates.
Fed officials have mostly echoed comments that the central bank may be nearing the end of their rate hike cycle, but will keep them at elevated levels for an extended period, and could continue to hike if the data supports it.
The yield on 10-year Treasury notes was down 0.7 basis points to 3.956%.
The 10-year yield reached a four-month high of 4.091% last week, while the two-year yield reached 4.944%, its highest level in over 15 years before pulling back on Friday.
"The higher yields that we have seen through the month of February has kind of run its course at this point," said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania. "With Powell speaking tomorrow (Tuesday) and the labor market report that basically started this whole thing on Friday, now the market is just waiting for new insight to trade on, either to reinforce what we saw in February or to potentially start another tilt going in the other direction." The February jobs report is expected to show nonfarm payrolls increased by 200,000, coming off the much stronger-than-expected 517,000 jobs reported in January.
Expectations for a 50 basis point rate hike by the Fed have been slowly inching higher, with traders pricing in a 30.6% at the March meeting, per CME's FedWatch Tool, up from the 24% one week ago.
The yield on the 30-year Treasury bond was down 0.9 basis points to 3.879%.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , seen as an indicator of economic expectations, was at a negative 92.4 basis points.
The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.7 basis points at 4.878%.
The breakeven rate on five-year U.S. Treasury
Inflation-Protected Securities (TIPS) was last at
2.793%, after cFriday at 2.796% on Friday, its highest close
since late August.
The 10-year TIPS breakeven rate was last at
2.496%, indicating the market sees inflation averaging 2.5% a
year for the next decade.
(Reporting by Chuck Mikolajczak; Editing by Will Dunham)
