Treasury Yields Mixed as DOJ Probe Into Fed Chair Powell Raises Uncertainty

U.S. Treasury yields showed mixed movement on Monday following disclosure that the Department of Justice has launched a criminal investigation into Jerome Powell, adding a new layer of uncertainty to markets already focused on inflation risks.

The 10-year Treasury yield rose just over 1 basis point to 4.187%, while the 2-year yield slipped 2 basis points to 3.517%. The 30-year bond yield climbed 3 basis points to 4.853%, reflecting cautious positioning as investors weighed political developments against macroeconomic fundamentals.

Powell said the probe centers on a $2.5 billion renovation of the Federal Reserve’s Washington headquarters. In a video statement posted by the Federal Reserve, he argued the investigation stems from pressure by Donald Trump, who has publicly criticized the Fed for not cutting interest rates more aggressively.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public,” Powell said, warning that political interference could undermine the Fed’s independence. The central bank cut rates three times in 2025, but policymakers are widely expected to pause further easing at their late-January meeting.

Investor attention is now turning back to economic data. The consumer price index due Tuesday and the producer price index on Wednesday are expected to provide key signals on inflation trends and help determine whether markets should anticipate renewed rate cuts later this year.

For now, bond markets appear caught between political risk and data dependence, with yields reflecting unease over governance at the Fed alongside lingering uncertainty about the inflation outlook.