FX.co ★ US 10-Year Yield Falls Further on Recession Fears

The yield on the US 10-year Treasury note dropped below 4% on Friday, marking its lowest point in six months. This decline was driven by increasing concerns that President Donald Trump's aggressive tariff policies and the potential for retaliatory actions from key trading partners could spark a global economic downturn. Trump has imposed a 10% baseline tariff on all imports starting April 5, with increased tariffs affecting approximately 60 countries. Among those, China is hit with a 54% levy, the EU faces 20%, Japan 24%, India 27%, and Vietnam 46%. In response, markets are pricing in expectations of higher inflation, slower growth, and more interest rate cuts from the Federal Reserve. The trading community anticipates four 25-basis-point rate cuts from the Fed this year, predicting the first reduction as early as June. In a surprising turn, Trump expressed a willingness to engage in trade negotiations, despite earlier contradictory statements from his advisors. Investors are now eagerly awaiting Friday’s monthly jobs report, which could further influence expectations regarding the Fed’s impending decisions.