FX.co ★ US 10-Year Yield Holds Weekly Increase

The yield on the 10-year US Treasury note surpassed the 4.45% threshold on Tuesday, maintaining proximity to the one-month peak of 4.5% observed in the preceding session. This movement comes as markets continue to evaluate the implications of enhanced trade flows between the US and China and possible effects on economic growth and interest rates in the current year. In a joint decision, the US and China agreed to reduce tariffs against one another for a period of 90 days. This move alleviated fears that escalating trade barriers could lead to a recession in the US, leading to a marked improvement in risk sentiment and an uptick in yields on long-term US Treasuries. As a result, rate traders adjusted their positions, scaling back from projecting four Federal Reserve rate cuts by December to anticipating only two. This recalibration occurs despite April's CPI figures being softer than anticipated. This may be attributed to companies stockpiling inputs before the imposition of US tariffs, potentially postponing the immediate inflationary effects of trade barriers on consumer prices.