U.S. President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., U.S., April 2, 2025.
Carlos Barria | Reuters
The benchmark 10-year Treasury yield climbed back above the 4% level on Monday, even as President Donald Trump’s tariffs sparked fears of an economic slowdown.
The yield on the 10-year Treasury gained around 5 basis points at 4.039%. The 2-year Treasury yield dropped around 3 basis points to 3.631%, though it was well off the September 2022 low reached earlier in the session.
One basis point equals 0.01%. Yields and prices move in opposite directions.
The 10-year Treasury yield’s move higher comes even as traders raised their expectations for lower Federal Reserve rates on expectations for a weaker economy. Fed funds futures pricing are now indicating around a 50% chance that the central bank will lower rates by a quarter-point percentage at its May meeting and now see the central bank cutting rates at least five times in 2025.
Trump, along with his cabinet officials, have repeatedly highlighted their desire to bring down Treasury yields which they said would lower the cost of borrowing. Even on Monday, Trump wrote in a post on Truth Social that “interest rates are down” when yields were sharply lower early morning and called for the Fed to cut rates.
Investors are reeling from the impact of the Trump tariffs unveiled last week, which hit over 180 countries and set a baseline tariff of 10% across the board. Major trading partners of the U.S. took some of the steepest tariffs, with China facing a total tariff rate of 54%.
The tariffs have stoked fears of a global trade war, as countries respond with their own tariffs on the United States. China retaliated Friday by slapping 34% tariffs on U.S. goods, and the EU has vowed to impose countermeasures if negotiations fail.
Trump continued to downplay the impact of tariffs, saying on Sunday evening, “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
