By Joy Wiltermuth and Jamie Chisholm
Bond yields ended higher Tuesday as investors monitored the tariff front, awaited a key inflation report out Wednesday and stayed on guard about a slowing U.S. economy.
What’s happening
— The yield on the 2-year Treasury note BX:TMUBMUSD02Y was 4.4 basis points higher at 3.939%, near lows last seen in mid-October. Yields move in the opposite direction to prices.
— The yield on the 10-year Treasury BX:TMUBMUSD10Y rose 7.3 basis points to 4.286%.
— The yield on the 30-year Treasury BX:TMUBMUSD30Y gained 6.2 basis points to 4.601%.
What’s driving markets
The 2-year Treasury yield ended near lows last seen in mid-October after the U.S. and Canada made moves to potentially lower the heat on a recent wave of tit-for-tat tariffs.
Trump earlier in the session threatened to double tariffs on steel and aluminum coming from Canada to 50%, but the Canadian province of Ontario responded by saying it would back off a new 25% surcharge on electricity exports to the U.S.
That helped stocks recover some earlier lost ground. The S&P 500 index SPX still remained on the doorstep of correction territory, while the Nasdaq Composite COMP was already down at least 10% from its prior peak, meeting the definition of a correction.
Equities have been particularly vulnerable to fears about a slowing U.S. economy, which could produce a faster pace of interest-rate cuts by the Federal Reserve.
Longer-term yields rose Tuesday, but have been suppressed of late by investors seeking safety as the economic growth scare pushed the U.S. stock market sharply lower.
Markets were pricing in a 54.6% probability that the Fed will cut interest rates by at least 25 basis points from the current range of 4.25% to 4.50% after its meeting in June, according to the CME FedWatch Tool. A month ago, the chances of such a move were priced at just 41.4%.
In economic data, job openings showed a slight increase in January, even as fewer companies were hiring compared with recent years. Fears have been rising that President Trump’s tariffs could potentially result in a tougher employment backdrop.
The U.S. Treasury also saw softer demand for a $58 billion auction of 3-year notes – with the yield coming in at 3.908%, or above the “when issued” 3.902% rate at the time of the auction.
“There is just a tremendous amount of nervousness in the market,” said Tom Di Galoma, managing director at Mischler Financial Group. “There are a lot of questions about the economy right now, and about what’s going to happen.”
-Joy Wiltermuth -Jamie Chisholm
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03-11-25 1622ET
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