FX.co ★ US 10-Year Yield Jumps After ISM

The yield on the 10-year US Treasury note rose to 4.35% on Monday, continuing its upward trend from last week. This increase was driven by market concerns over potential inflation against the backdrop of economic uncertainty due to tariffs. Recent data from the Institute for Supply Management (ISM) showed significant growth in US services activity and rising cost pressures, aligning with last week's robust employment report and higher-than-expected personal consumption expenditures (PCE) inflation data. These developments contrasted with indicators highlighting adverse effects from trade tensions, such as the GDP contraction in the first quarter, a spike in imports to preempt expected tariffs, and a drop in port activity. Uncertainty surrounding President Trump's tariff policies contributed to a market consensus that the Federal Reserve would leave interest rates unchanged this week. Although fears of economic slowdown led to expectations of several rate cuts by the Fed this year, support for US Treasuries was tempered by concerns that unclear economic policies could undermine the US's unique position in global capital markets.