Investors also keyed in on Monday's 10-year Treasury auction after the benchmark bond skidded below 1.3% last week, hitting a low not seen since February.
How Treasurys are performing
On Friday , the 2-year, 10-year and 30-year Treasurys all notched back-to-back weekly declines, as equity markets booked a trifecta of record highs.
Fixed-income drivers
The spread of COVID-19's Delta variant has been partly blamed for recent buying in government debt, which has pushed prices higher and yields lower. However, a number of fixed-income strategists continue to hold the view that the benchmark bond yield will drift back up toward 2% by the end of 2021.
Markets are awaiting additional insights about the economy to better assess the outlook for financial markets and businesses.
Powell is scheduled to deliver the Fed's semiannual report to Congress on the state of the U.S. economy starting on Wednesday. Central bank officials have said that they believe pricing pressures will be short-lived. A Fed report out last week indicated that supply-chain bottlenecks are creating inflation that could be "more lasting but temporary." How investors interpret the term "temporary" might raise some anxieties.
Before Powell's testimony, the consumer-price index on Tuesday is expected to underscore a run-up in inflation as the economy emerges from the deadliest pandemic in generations.
Earnings season unofficially kicks off on Tuesday with the likes of JPMorgan Chase & Co. $(JPM)$ and Goldman Sachs$(GS)$ reporting. Investors view those financial institutions as bellwethers for the health of the economy.
Monday's auction of $38 billion in 10-year Treasury notes produced solid results, with the notes awarded at a 1.371% yield that was just below the when-issued yield. Meanwhile, a sale of three-year notes was awarded at 0.4260%.
Meanwhile, New York Federal Reserve President John Williams spoke to reporters after a virtual event on Monday, saying that the Fed's purchases of Treasury securities and mortgage-backed securities are affecting both interest rates and financial conditions.
There were no major data releases Monday.
What strategists and traders say
"The 10-year auction confirmed the repositioning that began last week, when demand for longer-end Treasuries was not completely satisfied by large buying waves in the secondary market," Jim Vogel, executive vice president at FHN Financial, said in a phone interview with MarketWatch.
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