FX.co ★ US 10-Year Yield Halts Decline

The yield on the 10-year US Treasury note remained steady at 4.35% on Thursday, pausing the sharp decline witnessed in the prior session. This stabilization occurred as markets continued to evaluate recent trade maneuvers and their potential effects on inflation and monetary policy. President Trump accelerated his implementation of a 50% tariff on copper goods to take effect by August 1st, a move that could exert inflationary pressure on a broad range of manufactured products. Additionally, he imposed a 50% tariff on imports from Brazil, despite the United States maintaining a trade surplus with the largest economy in Latin America. In response, bond markets reacted to Trump’s advocacy for a 300 basis point reduction in the Fed funds rate, sparking speculation about the possibility of a dovish Federal Reserve nominee in the upcoming year and impacting longer-term inflation forecasts. On the economic data front, initial unemployment claims were reported below expectations, marking a fourth consecutive week of decline, thus reinforcing the perception of a strong job market following last week's encouraging non-farm payroll figures. Investors are maintaining their anticipation of two interest rate cuts this year, although futures markets indicate a consensus expectation that rates will remain unchanged this month.