FX.co ★ US Treasury Yields Rise on Monday after US-China Deal

On Monday, the yield on the US 10-year Treasury note advanced approximately 6 basis points to reach 4.45%, marking its highest point in around a month. This upward movement was driven by a renewed sense of risk appetite spurred by the announcement that the United States and China have agreed to significantly reduce tariffs. According to the 90-day pact, the US will decrease tariffs on Chinese goods from 145% to 30%, while China will reduce its duties on US imports from 125% to 10%. This development has invigorated investor confidence, indicating a genuine commitment from both countries to alleviate trade tensions. Meanwhile, market focus is now turning towards critical upcoming inflation data, with the Consumer Price Index (CPI) and Producer Price Index (PPI) reports poised to shed light on inflationary trends and whether the impacts of the tariffs are already influencing price increases. Presently, traders are factoring in two 25 basis point reductions to the federal funds rate this year, with the first likely occurring in September, scaling back from the three rate cuts expected just a week prior.