US 10-year yield stabilizes ahead of tariff rollout

The yield on the US 10-year Treasury note steadied around 4.2% on Wednesday after a three-day decline, as investors cautiously awaited President Donald Trump’s latest tariffs announcement.

US 10-year yield stabilizes ahead of tariff rollout

The yield had been under pressure in recent days as market participants grappled with the potential economic implications of the upcoming trade measures. The White House confirmed that reciprocal tariffs on nations imposing duties on US goods would take effect immediately, signaling a hardline stance on trade disputes. However, Treasury Secretary Scott Bessent reassured markets by stating that the tariffs would serve as a "cap," allowing countries time to take steps to reduce them, offering a bit of flexibility and potentially mitigating the broader economic impact. The cautious mood was compounded by a series of economic data points that indicated mixed signals about the health of the US economy. On Tuesday, data showed that US factory activity contracted in March for the first time this year, pointing to some weakening in manufacturing. While this raised concerns about the broader economic slowdown, prices rose for a second consecutive month, signaling the ongoing inflationary pressures likely tied to the impact of tariffs. These rising costs have weighed on businesses and consumers, raising concerns about the broader effects of the trade war on the economy.

Job openings in the US decline in February

In addition, job openings in the US declined in February, signaling a slight cooling of the labor market, though layoffs remained low, indicating that companies were not yet shedding large numbers of workers. This reflected a labor market that is gradually moderating, with hiring slowing down but not yet indicative of a significant downturn. These mixed signals on economic growth and inflation have left investors uncertain about the Federal Reserve's next moves.

Investors eye job report

As a result, investors are closely monitoring the ADP employment report on Wednesday and the official nonfarm payrolls report on Friday for further clues on labor market trends and the overall health of the economy. These reports will be critical in shaping expectations around the Fed's future policy decisions, particularly regarding interest rates, as the central bank seeks to balance economic growth with inflation control. Market participants are hoping for signs of a resilient labor market that would support further economic expansion without leading to runaway inflation.