FX.co ★ US 10-Year Yield Edges Lower

The yield on the US 10-year Treasury note decreased to approximately 4.04% in post-holiday trading on Tuesday, marking its second consecutive session of decline. This trend is driven by uncertainties surrounding trade and the anticipation of interest rate cuts by the Federal Reserve, which have bolstered the appeal of government bonds. On Friday, yields significantly fell after President Donald Trump announced potential substantial tariff increases on China, in retaliation to Beijing's recent export restrictions on rare earth minerals. However, later comments from Trump softened, with reassurances that trade relations "will all be fine." Subsequently, both countries expressed readiness to resume negotiations, potentially setting the stage for a meeting between Trump and Xi in South Korea later this month. In the meantime, the ongoing US government shutdown has curtailed the release of crucial economic data, prompting investors to focus on forthcoming bank earnings reports for insights into economic trends. Market sentiment continues to anticipate a quarter-point rate cut by the Fed this month, with the possibility of an additional cut in December.