FX.co ★ 10-Year Treasury Yield Rebounds

On Wednesday, the yield on the 10-year US Treasury note climbed to over 4.21%, marking an 8 basis point increase from the three-week low of 4.13% recorded earlier in the session. The rise was fueled by pessimistic economic data that heightened worries about the impact of tariffs and uncertain economic policies. These factors have eroded the perception of US exceptionalism, which has long supported US bonds. The US GDP saw a contraction at an annualized rate of 0.3% in the first quarter of the year, defying expectations of a 0.3% growth. This downturn was attributed to weaker consumer spending and a surge in imports aimed at sidestepping tariffs, while both headline and core PCE prices increased more than anticipated. Furthermore, a significant decline was observed in employment growth as measured by the ADP report. Meanwhile, the US Treasury raised its borrowing plans for Q2 by a greater margin than predicted, a move that stands in stark contrast to the earlier signals of decreasing deficits during the Trump administration. Nonetheless, the issuance of long-term Treasuries remained constant.