Short-dated U.S. Treasury yields fell Tuesday after Federal Reserve Chairman Jerome Powell announced the U.S. central bank would increase the size of its balance sheet soon.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -1.91%   was down 2.1 basis points to 1.532%, while the 2-year note TMUBMUSD02Y, -2.48%   rate fell 4.2 basis points to 1.424%. The 30-year bond yield TMUBMUSD30Y, -0.98%   edged lower by a single basis point to 2.033%.

What’s driving Treasurys?

Powell said the Fed was contemplating buying shorter-term Treasury bills, which include maturities of one year and less, but he emphasized the increase of its nearly $3.6 trillion-sized portfolio did not mean a return to quantitative easing and did not have a bearing on its monetary policy stance.

Analysts have demanded the central bank resume outright bond purchases to contain surges in short-term funding costs by increasing banking system reserves at the Fed, after stresses in the so-called repo market a few weeks ago led the central bank to conduct its first repurchasing agreements since the financial crisis.

On the U.S.-China trade front, the U.S. Department of Commerce put eight Chinese video surveillance and artificial intelligence-related tech companies on the so-called Entity list, which restricts U.S. firms from selling technology to Chinese companies.The U.S. also slapped visa restrictions on Chinese officials linked to human rights abuses in Xinjiang.

At the same time, the White House said it would not remove U.S.-listed Chinese companies from the country’s stock exchanges, reports of which had sparked turbulence in stock and bond markets before.

See: ‘Socially responsible’ investors may have unwittingly backed police-state surveillance in China

Vice Premier Liu He is set to visit Washington on Oct. 10-11 ahead of next week when tariffs on $250 billion worth of Chinese imports will increase to 30% from 25%. Both sides have tempered hopes that negotiations will be fruitful, with news reports suggesting Chinese officials want to take certain issues like state subsidies off the table.

South China Morning Post reported that the Chinese delegation may cut its visit short, leaving Washington on Friday, instead of the originally scheduled Saturday.

In economic data, the NFIB small business optimism index fell 1.3 points to 101.8. last month. Producer prices for September fell 0.3%.

Read: The Trump tweets that move Fed expectations aren’t the ones bashing Powell, Goldman Sachs finds

What did market participants’ say?

“We have been writing about the Fed’s need to address the balance sheet, supply glut and reserve levels at the upcoming meeting. The issues in the U.S. funding market run deeper, but short-term this is the most logical step for the Fed to take,” wrote Gregory Faranello, head of U.S. rates at AmeriVet Securities.