FX.co ★ US 10-Year Yield Drops Below 4.4%

On Friday, the yield on the 10-year US Treasury note decreased to 4.4%, following a peak of 4.55% just the previous day, which marked a three-month high. This adjustment was influenced by recent data supporting the likelihood of several interest rate cuts by the Federal Reserve later this year. April figures showed that both consumer and wholesale prices were lower than anticipated, indicating that tariffs imposed by the White House hadn't immediately escalated prices. Nonetheless, there was an unexpected rise in import prices for the same month, hinting that companies might have been transferring the tariff costs to consumers. Moreover, the retail sales control group saw an unexpected decline, bolstering the stance of dovish Federal Open Market Committee (FOMC) members. Despite the drop, yields remained over 23 basis points higher compared to earlier in the month. In an effort to alleviate fears of a trade war-induced recession, the US and China mutually agreed to relax their tariffs on each other's goods for the subsequent 90 days. This move boosted risk appetite and led to a notable increase in long-term US Treasury yields.