U.S. Treasury yields fell slightly on Wednesday as investors anxiously awaited the release of the latest consumer inflation data and kept a close eye on tariff developments. At 4:40 a.m. ET, the 10-year Treasury yield was down by over one basis point, while the 2-year yield fell to its lowest level since October. Treasury yields and prices move inversely, with falling yields indicating rising demand for government bonds.
Market attention is focused on the upcoming Consumer Price Index (CPI) report, due to be released at 7:30 a.m. ET. The report is expected to reveal key insights into the health of the U.S. economy, particularly regarding inflation. February’s core inflation, which excludes food and energy costs, is anticipated to show a 0.3% increase on a monthly basis and a 3.2% rise year-over-year. Headline inflation is projected to be 2.9% annually.
As inflation figures are analyzed, investors are also keeping an eye on the trade landscape, particularly the impact of tariffs on inflation. President Donald Trump’s 25% tariffs on steel and aluminum came into effect on Wednesday, prompting Europe to announce counter-tariffs on $28 billion worth of U.S. goods, effective from April. The ongoing tariff disputes have heightened concerns about potential economic slowdowns.
In another development, Trump announced plans to double import duties on Canadian steel and aluminum to 50%, responding to Ontario’s decision to impose a 25% levy on electricity exports to the U.S. However, following talks between Ontario Premier Doug Ford and U.S. officials, the province temporarily suspended the duty, with trade advisor Peter Navarro clarifying that the tariff increase would not take effect. This ongoing trade uncertainty adds complexity to the financial markets’ outlook.
SOURCE: CNBC