Treasury Yields Drop as Inflation and Trade Concerns Ease
U.S. Treasury yields fell sharply on Thursday as inflation worries and trade tensions showed signs of easing.
The 10-year Treasury yield dropped over 10 basis points to 4.531%, while the 2-year yield declined to 4.307%.
Despite a higher-than-expected producer price index (PPI) increase of 0.4% in January, analysts believe inflationary pressures may not be as severe as feared. Excluding food and energy, core PPI met expectations at 0.3%. Experts suggest these numbers could lead to a softer PCE price index, the Federal Reserve’s preferred inflation gauge.
On the trade front, former President Donald Trump signed a memorandum outlining plans for “reciprocal tariffs” on foreign goods. However, these measures won’t take effect immediately, as Commerce Secretary nominee Howard Lutnick will review them first.
Treasury yields had spiked on Wednesday after a higher-than-expected consumer inflation report. However, Thursday’s data and tariff developments helped calm market concerns, leading to a bond rally.
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