The yield on the 10-year U.S. Treasury note eased to 4.43% on Monday, pulling back from last week’s highs above 4.5%, as markets digested the latest developments in U.S. trade policy and their potential implications for economic growth and foreign appetite for U.S. debt.
US 10-year yield inches lower
The slight drop in yields signaled a modest recovery in demand for Treasuries following recent sharp selloffs driven by rising geopolitical and policy risks.
Investor sentiment improved slightly after the White House temporarily exempted consumer electronics and computers from its latest round of tariffs on Chinese imports. The move was interpreted as a signal that President Trump may show restraint in implementing aggressive tariffs if market stress threatens to destabilize financial conditions. This perception offered a brief reprieve to bond markets, which had been under pressure throughout April due to fears of rising inflation and weakened global confidence in U.S. fiscal stability.
Uncertainty remains high
However, uncertainty remains high. Trump clarified that the exemptions are only temporary, and that new tariffs on semiconductors and other electronics are still on the table. The lack of a consistent policy stance has left markets jittery, fueling volatility and reinforcing concerns about the long-term demand for U.S. debt.
The instability has also contributed to a sharp narrowing of swap spreads—an indicator often used to gauge risk appetite and liquidity in bond markets—underscoring growing investor unease. With Treasury auctions scheduled this week and more trade-related announcements expected, bond traders are bracing for continued volatility, while closely monitoring the administration’s next moves and any shifts in global demand for U.S. securities.
