FX.co ★ US 10-Year Yield Holds Near 3-Month

The yield on the 10-year U.S. Treasury note remained around 4.2% on Wednesday, nearing a three-month low. This trend is largely due to growing investor anticipation of a more dovish approach from the Federal Reserve. Recent data from the Institute for Supply Management (ISM) indicated that U.S. services activity nearly halted in July, significantly underperforming expectations and drawing attention to the increasing economic challenges posed by President Donald Trump’s tariffs. Furthermore, Trump announced his intention to nominate a candidate to fill a vacancy on the Federal Reserve Board by the end of the week, with considerations ongoing for a potential replacement for Chair Jerome Powell. Market participants are now factoring in a more than 90% likelihood of a Fed rate cut in September, alongside expectations for approximately 60 basis points of easing by the end of the year. In trade developments, Trump also issued threats of imposing tariffs of up to 250% on pharmaceutical imports, as well as potential duties on semiconductors.