On Wednesday, US Treasury yields experienced an uptick as markets processed the far-reaching effects of President Trump’s newly introduced tariff policies on both economic growth and inflation. The yield on 10-year Treasury notes momentarily ascended to 4.5% before retreating to approximately 4.35%. Meanwhile, the yield on 30-year Treasury bonds rose above 4.8%, marking its highest point in nearly two months. This shift indicates increased investor concern after Trump’s reciprocal tariffs took effect, imposing a cumulative 104% tax on Chinese imports. This heightened tariff activity has sparked worries about a possible US recession and persistent inflation, potentially restricting the Federal Reserve's capacity to further reduce interest rates.
Additionally, pressures on US Treasuries were exacerbated by reports of foreign investors offloading holdings and a general move towards liquidity as certain investors seemed to be accumulating cash. Notably, on Tuesday, the Treasury Department conducted an auction for $58 billion in 3-year notes. This auction, deemed "weak," was the first since Trump’s tariff announcement.
