FX.co ★ US 10-Year Yield Hits 2-Month Low

The yield on the US 10-year Treasury note decreased to approximately 4.22% on Tuesday, marking its lowest point in two months. This decline reflects growing concerns about the US fiscal outlook and trade-related uncertainties affecting market sentiment. Investors are intently observing the Senate's progress in passing President Trump's extensive tax-cut and spending legislation, aimed for completion by the July 4 deadline. This legislative package is anticipated to increase the national debt by $3.3 trillion, sparking worries regarding long-term fiscal sustainability. Concurrently, market participants are keenly awaiting updates on trade discussions with key US trade partners, as the 90-day temporary suspension of broad reciprocal tariffs initiated by Trump is set to end next week. Additional downward pressure on yields is driven by expectations of more significant Federal Reserve rate cuts, influenced by dovish signals from policymakers and persistent pressure from Trump to relax monetary policy. Moving forward, focus shifts to Thursday's monthly employment report, expected to provide new insights into the health of the US labor market.