US Treasury yields experienced a rise, halting a five-day streak of gains, as investor demand for safe-haven assets decreased. This shift occurred following the Trump administration’s progress on trade agreements with key international partners. Yields increased by approximately four to five basis points on Wednesday (Thursday AEST), pushing the benchmark 10-year note to 4.38 per cent.
The market remained relatively stable after a $13 billion auction of 20-year debt attracted robust demand. This indicates that investors are prepared to acquire longer-dated US government debt while interest rates remain elevated. Concurrently, the United States and the European Union are reportedly advancing towards a trade agreement that would establish a 15 per cent tariff on the majority of imports, according to Bloomberg. This development follows a similar agreement reached this week with Japan, also involving a comprehensive 15 per cent levy.
Investor sentiment shifted towards equities, contributing to a fourth consecutive day of decline for the US dollar. Additionally, the 10-year Treasury yield surpassed its 200-day average. John Briggs, head of US rates strategy at Natixis Corporate & Investment Banking, commented on the market’s reaction, stating, “I understand the relief and thus higher yields on the day because there is less of a chance of the adverse economic scenario that looked possible.”
Briggs further suggested that increased trade clarity could potentially accelerate the Federal Reserve’s timeline for future interest rate cuts. “But, more trade clarity means the Fed can get back to cutting rates faster than before,” he added.
