The yield on the US 10-year Treasury note climbed to around 4.70% on Friday, rising for a fifth consecutive session and holding at its highest level since January 2025. The move came as President Donald Trump’s latest tariff package intensified concerns about escalating trade tensions between the US and its key partners. Imports from countries such as Mexico, Canada, the UK, and India will face a 10% tariff linked to alleged forced-labor violations, while most goods from the EU and Taiwan will also be subject to a 10% duty. In addition, products from Japan, South Korea, and Switzerland will face tariffs of up to 12.5%, with further levies imposed on selected items.
On the monetary policy front, surging energy prices driven by mounting tensions in the Middle East, together with a still-robust US labor market, strengthened expectations for further policy tightening. Swap markets are now pricing in a 34% probability of a Federal Reserve rate hike next week, at least one additional increase by September, and the possibility of another move before year-end.
