FX.co ★ Treasury Yields Edge Up

On Tuesday, the yield on the US 10-year Treasury note advanced to approximately 4.37%, reaching its highest point in nearly two weeks. This movement occurs amidst investors' heightened focus on trade tensions and as they anticipate tomorrow's Federal Open Market Committee (FOMC) decision. Although it is largely anticipated that the Federal Reserve will maintain the federal funds rate, attention is keenly directed towards any potential indications of future policy moves and the central bank’s evaluation of how President Trump's trade policies are affecting the economy. Trade talks are set to resume this week between the US and several Asian nations, although discussions with China remain at a standstill. From an economic data perspective, the ISM services report revealed significant growth in activity paired with escalating cost pressures, underscoring the strength observed in last week’s employment report. These strong numbers stand in contrast to markers of economic pressure due to trade tensions, such as a Q1 GDP contraction, a rise in imports before the implementation of new tariffs, and a pronounced drop in port activity.