US Bond Yields Decline Amid Trade War Fears Ahead of FOMC Decision

US bond yields fell on Tuesday as investors awaited the Federal Reserve’s decision, the central bank’s statement, and remarks by its Chairman Jerome Powell at a press conference following the interest rate announcement next Wednesday.

Concerns over further escalation of trade tensions, due to Washington’s trade policies with its partner countries, remain a major source of anxiety and tension in the markets, increasing demand for US government bonds.

Government bond yields were negatively impacted by widespread expectations that the Federal Reserve would keep interest rates unchanged at its meeting.

There is a direct relationship between the Federal Reserve’s interest rates and benchmark government bond yields, which has caused yields on this type of security to decline due to expectations of stable interest rates. This decline is further influenced by the possibility that Jerome Powell, Chairman of the Federal Open Market Committee, may indicate that inflation is declining steadily.

The yield on the 10-year US Treasury bond fell to 4.228%, compared to the previous daily close of 4.306%. Yields rose to their highest level of the current trading day at 4.341%, compared to the lowest levels recorded at 4.306%.