The yield on the US 10-year Treasury note climbed to 4.06% on Wednesday, rebounding from the near three-month lows reached earlier in the week. The previous decline had followed President Trump’s announcement of a blanket tariff on all imports, made after the Supreme Court rejected his reciprocal tariff proposal. The tariff ultimately took effect at a lower-than-expected rate of 10%, which tempered safe-haven demand and helped push yields higher.
At the same time, money markets have scaled back expectations for Federal Reserve interest rate cuts. The implied probability of a quarter-point reduction by June has dropped to 50%, the lowest level so far this year, while bets on a third cut by year-end have largely disappeared.
Investors are also looking ahead to speeches from several Fed officials this week for additional clues on the policy outlook, as well as the US Treasury’s upcoming $70 billion auction of new five-year notes. Tuesday’s sale of two-year notes cleared broadly in line with the when-issued yield.
