Treasury Bond Yields Rise on Expectations of Slower Rate Cuts

Treasury bond yields continued to climb, buoyed by statements from U.S. President Donald Trump threatening to raise tariffs on all U.S. imports as part of a renewed comprehensive trade policy framework for the new administration, which will rely more on trade restrictions and protectionist tariffs.

The yield on the 10-year U.S. Treasury bond increased to 4.543%, compared to the previous close of 4.541%. Yields on this type of government bond had fallen to 4.533%, from a low of 4.582%. Trump indicated on Monday that he wants the U.S. to expand tariffs on imports coming into the U.S. from around the world, “from steel and copper to semiconductors.”

Trump also said he is considering “raising the general tariff to levels higher than 2.5%,” indicating a hike in tariffs that cover all U.S. imports. This suggests that the U.S. president may soon begin restructuring U.S. trade policies.

Tariffs and other restrictions are among the most important inflationary policies, as they can raise prices in markets and pass them on to consumers in the United States, which increases inflation rates and forces the Federal Reserve to slow the pace of interest rate cuts.

There is a direct relationship between rising interest rates and yields on U.S. bonds, which has led to a rise in yields following Trump’s statements.