FX.co ★ Treasury Yields Edge Higher, 10-Year Near One-Month High

The yield on the US 10-year Treasury note increased to 4.44% on Monday, reaching its highest level in almost a month. This rise comes amid pressure on bond markets due to escalating trade tensions and the anticipation of pivotal inflation data. President Trump announced a 30% tariff on imports from both the European Union and Mexico, set to commence on August 1. Although leaders from these trading partners have committed to continuing negotiations to potentially alleviate the tariff impact, market sentiment remains cautious. Nevertheless, investors speculate that the final tariff rate may ultimately be lower. Attention is now directed toward Tuesday’s Consumer Price Index (CPI) release, anticipated to reveal an increase in inflation as businesses begin to pass on the higher costs of imports. Producer Price Index (PPI) data is also due later in the week. In the meantime, markets are pricing in two quarter-point reductions to the federal funds rate this year, with the first cut expected in September.