The benchmark 10-year Treasury yield climbed back above the 4% level on Monday, even as President Donald Trump’s tariffs sparked fears of an economic slowdown.
The yield on the 10-year Treasury gained around 18 basis points at 4.166%. The 2-year Treasury yield advanced 8 points at 3.753%.
One basis point equals 0.01%. Yields and prices move in opposite directions.
The 10-year Treasury yield’s move higher comes even as traders raised their expectations for lower Federal Reserve rates on expectations for a weaker economy. Fed funds futures pricing is now indicating around a 50% chance that the central bank will lower rates by a quarter-percentage point at its May meeting and now sees the central bank cutting rates at least five times in 2025.
“Given the situation, I’m not sure international investors look at the U.S. as the safe haven as they have before, which is going to cause Treasury prices to fall and yields to go up,” said Clark Bellin, chief investment officer at Bellwether Wealth.
Trump, along with his cabinet officials, have repeatedly highlighted their desires to bring down Treasury yields, which they said would reduce the cost of borrowing. Even on Monday, Trump wrote in a post on Truth Social that “interest rates are down” when yields were sharply lower early morning and called for the Fed to cut rates.
Investors are reeling from the effects of the Trump tariffs unveiled last week, which hit more than 180 countries and set a baseline tariff of 10% across the board. Major trading partners of the U.S. took some of the steepest tariffs, with China facing a total tariff rate of 54%.
The tariffs have stoked fears of a global trade war, as countries respond with their own tariffs on the U.S. China retaliated Friday by slapping 34% tariffs on U.S. goods, and the European Union has vowed to impose countermeasures if negotiations fail.
Trump continued to downplay the effects of tariffs, saying on Sunday evening, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
