Treasury Yields Drop Ahead of Trump’s Tariff Policy Rollout Amid Economic Uncertainty

On Tuesday, U.S. Treasury yields decreased as investors braced for the rollout of President Donald Trump’s tariff policy. The 10-year Treasury yield fell by 5 basis points to 4.194%, while the 2-year yield dropped over 2 basis points to 3.885%. The decline in yields came as traders anticipated the potential impacts of Trump’s tariff measures, set to take effect on April 2.

Investors are hoping that the implementation of the tariffs will provide more clarity regarding U.S. trade policy, reducing some of the ambiguity in the market. Many are optimistic that once the tariffs are in place, the uncertainty surrounding how they will unfold will ease. However, a data-heavy week ahead could further shape market sentiment, with reports on job openings, private payroll numbers, and key employment data scheduled for release.

While some market participants expect a positive reaction after the tariffs are implemented, with a possible “snap-back” rally in risk assets, others are concerned about the broader economic impact. Economists are increasingly worried that the economy might not be able to withstand the potential stress caused by the tariffs, especially as households face increasing financial pressures.

Economic growth projections have been downgraded, with economists now forecasting a modest 0.3% growth for the first quarter of 2025, down from 2.3% in the fourth quarter of 2024. This sharp slowdown has fueled fears that the tariffs could trigger a recession, adding to the heightened uncertainty surrounding both domestic and global economic conditions.

Source: cnbc