FX.co ★ US 10-Year Treasury Yield Bounces Back Above 4%

On Monday, the yield on the U.S. 10-year Treasury rose back above 4%, recovering somewhat from its six-month low. This development coincided with the implementation of President Trump's extensive tariffs, which have sparked fears of an economic downturn. The newly announced tariff policy impacts more than 180 countries, establishing a baseline rate of 10%, with higher charges for significant trade partners. China, in particular, is now subject to a total tariff of 54%. This has heightened the potential for a global trade war, with China responding by imposing 34% tariffs on U.S. goods, and the European Union threatening its own retaliatory measures should negotiations falter. Trump downplayed market apprehensions, stating, “sometimes you have to take medicine to fix something,” during comments made on Sunday. In reaction to the situation, traders are increasingly expecting the Federal Reserve to ease monetary policy, with futures markets now anticipating five rate cuts by 2025. According to the CME FedWatch tool, there is approximately a 50% likelihood of a quarter-point rate reduction in May.