FX.co ★ US 10-Year Yield Falls on Tariff Concerns, Soft Inflation Data

The yield on the US 10-year Treasury note fell to approximately 4.4% on Thursday, marking a decrease of about 10 basis points over the week. This decline is attributed to renewed threats of tariffs and inflation data that fell short of expectations. President Donald Trump announced plans to dispatch letters to trading partners within the next couple of weeks, which will detail unilateral tariffs designed to coerce these countries into reaching trade agreements. However, Treasury Secretary Scott Bessent indicated that the administration may consider extending the current 90-day suspension of reciprocal tariffs for nations demonstrating "good faith" in trade talks. This situation has further pressured yields downward, as all principal inflation indicators from the May Consumer Price Index report came in below expectations. This data has bolstered market speculation regarding the possibility of a Federal Reserve interest rate cut as soon as September, with rising expectations for a second cut by December. Investors are now keenly awaiting Thursday’s Producer Price Index release, seeking further insights into the future of inflation and monetary policy.