Dollar gains, yen slips as Japanese yields tumble

NEW YORK – The dollar strengthened on Tuesday as the yen came under pressure from a sharp fall in Japan’s long-dated bond yields, while the greenback was boosted by data improving US consumer confidence.

“It’s very much being driven by global bond markets, and most recently what we’ve seen in Japan,” said Eric Theoret, FX strategist at Scotiabank in Toronto. “Market participants are reading into the fact that the Ministry of Finance sent out a questionnaire to their primary dealers about issuance.”

Bloomberg reported on Tuesday that the Japanese Ministry of Finance sent a questionnaire to market participants regarding issuance and current market issues. Japan will consider trimming issuance of super-long bonds in the wake of recent sharp rises in yields for the notes, two sources told Reuters on Tuesday.

The plan comes amid a recent spike in super-long bond yields to record levels due to dwindling demand from traditional buyers such as life insurers and global market jitters over steadily rising debt levels.

The dollar was last up 1% at 144.28 Japanese yen. The euro fell 0.46% to USD 1.1335.

The greenback added to gains after data showed US consumer confidence in May was much better than economists had expected.

Data this week will include personal consumption expenditures for April, the Federal Reserve’s preferred inflation measure, on Friday.

Minneapolis Fed President Neel Kashkari on Tuesday called for keeping interest rates steady until there is more clarity on how higher tariffs affect inflation, warning against “looking through” the impact of such supply price shocks.

The euro, meanwhile, was dented by data showing that French inflation fell to its lowest level since December 2020 in May.

US President Donald Trump on Sunday dropped his threat to impose 50% tariffs on European Union imports from next month, which boosted risk appetite on Tuesday.

European Union policymakers have asked the EU’s leading companies and CEOs to swiftly provide detail of their US investment plans, according to two sources familiar with the matter, as Brussels prepares for trade talks with Washington.

Investors are concerned that tariffs will hurt growth and potentially reignite inflation, though traders have become less pessimistic on the US economic outlook since the United States and China earlier this month reached a deal to slash tariffs they had imposed on each other.

Longer-term, the more protectionist stance of the United States is expected to continue to hurt the greenback.

“We’re still in an environment of medium to longer term US dollar weakness,” said Theoret.

European Central Bank President Christine Lagarde said on Monday that the euro could become a viable alternative to the dollar if governments could only strengthen the bloc’s financial and security architecture.

Investors are also watching the passage of a spending and tax bill through the US Congress that is expected to add trillions of dollars of debt.

“Our first take on the House budget is it’s not too bad, but could be better. It will reduce the deficit-to-GDP ratio, though probably not enough to put the budget on a sustainable path,” Chris Low, chief economist at FHN Financial said in a note.

Low noted, however, that “no one is happy” with the bill, with right-wing commentators upset that it didn’t further DOGE spending cuts, while left wing pundits are mainly opposed to the size of cuts to social spending.

US Senate Republicans said on Thursday they will seek substantial changes to the spending bill after it narrowly won approval in the House of Representatives.

Elsewhere the dollar strengthened 0.77% to 0.827 Swiss franc.

Swiss inflation could enter negative territory in the coming months, but this will not necessarily trigger a reaction by the Swiss National Bank, SNB Chairman Martin Schlegel said on Tuesday.

(Reporting by Karen Brettell; Additional reporting by Lucy Raitano in London and Rocky Swift in Tokyo; Editing by Mark Potter, Bernadette Baum, and Sandra Maler)

Euro logs one-month high after Trump delays EU tariffs

TOKYO/LONDON – The euro hit a one-month high against the US dollar on Monday after US President Donald Trump backed down from threatened 50% duties on European Union shipments from June 1, as the bloc asked for time to “reach a good deal”.

The dollar continued its decline against a broad spectrum of other currencies as Trump’s policy reversals, as well as the sweeping spending and tax-cut bill, turned investors away from US assets.

“The ‘Sell America’ theme, which obviously was the dominant theme back in April, is back on show,” said Ray Attrill, head of FX research at National Australia Bank.

“Markets have probably taken the view – and probably rightly so – that where we land eventually on a tariff situation between the US and the EU is not going to be at 50%, but how we get there is frankly anybody’s guess at the moment.”

The euro climbed as much as 0.55% to reach USD 1.1418 for the first time since April 29. It was last up 0.17% on the day at USD 1.1375, bringing gains for the year so far to 10%.

Much of the dollar’s decline in the past couple of months has been to the benefit of the euro, as investors have targeted a range of non-US markets.

The single currency could become a viable alternative to the dollar, the world’s reserve currency, if governments can strengthen the bloc’s financial and security architecture, European Central Bank President Christine Lagarde said on Monday.

“The ongoing changes create the opening for a ‘global euro moment,'” Lagarde said at a lecture in Berlin. “The euro will not gain influence by default – it will have to earn it.”

Sterling rose by 0.39% to its highest level since February 2022 and was last up 0.15% at USD 1.356.

The safe-haven yen and Swiss franc eased against a backdrop of improved investor sentiment. The dollar was last up 0.2% against the yen at 142.84, and was steady against the Swiss franc at 0.821 francs.

Trump announced his decision to delay EU tariffs until July 9 on Sunday after a call with European Commission President Ursula von der Leyen, who asked for more time to reach an agreement. July 9 is the end of the 90-day pause on Trump’s April 2 “Liberation Day” levies on the EU and many other trade partners.

The announcement, although encouraging for investors, is a stark reminder of how suddenly US trade policy can turn.

“Following Trump’s latest U-turn, we will, of course, have to wait and see what happens next. It is possible that a deal with the European Union will be reached by 9 July,” Commerzbank currency strategist Michael Pfister said.

“However, it is questionable what has changed in terms of the fundamental problems following a phone call. One thing should be clear after Friday’s announcement: the brief respite from tariffs that we enjoyed was only temporary.”

In a possible nod to fiscal worries among investors, Trump also said on Sunday that the spending and tax-cut bill is likely to see “significant” changes in the Senate.

The House of Representatives’ version of the bill is calculated to add about USD 3.8 trillion to the federal government’s USD 36.2 trillion in debt over the next decade, according to the Congressional Budget Office.

“What seems clear from the reconciliation bill…is that Trump and (Treasury Secretary Scott) Bessent have shifted tactics, swiveling hard from fiscal conservatism and reduced spending to an outright pro-growth policy stance,” said Chris Weston, head of research at Pepperstone.

“It is fast becoming a consensus view that the USD is on the path to a multi-year decline.”

(Reporting by Kevin Buckland; editing by Lincoln Feast, Joe Bavier, Rachna Uppal, and Mark Heinrich)

Oil holds steady; market awaits clarity on OPEC+ next move

CALGARY – Oil prices held steady on Monday with news that eight OPEC+ countries, who had pledged extra voluntary oil output cuts, will now meet on May 31, a day earlier than previously planned.

Brent crude futures settled down four cents at USD 64.74 a barrel, while US West Texas Intermediate crude last traded at USD 61.53 a barrel, unchanged from the prior day’s session.

Trading volumes were light due to the US Memorial Day holiday.

Three OPEC+ sources told Reuters on Monday about the change of the meeting date. The meeting will likely decide on July output, which sources have previously told Reuters will entail another 411,000 barrels per day of production increase.

The meeting is separate from the online ministerial meeting of the Organization of the Petroleum Exporting Countries and its allies, led by Russia, set for May 28. Russian Prime Minister Alexander Novak said on Monday that OPEC+ has not yet discussed hiking output by another 411,000 barrels per day ahead of its meeting, RIA news agency reported.

“At this stage, it feels like the market is exhausted with this,” said Rory Johnston, a Toronto-based analyst and founder of the Commodity Context newsletter, adding investors and traders are still anticipating the arrival of additional OPEC barrels but are disinclined to react significantly until something material emerges.

OPEC oil output edged lower in April despite a scheduled output hike taking effect, Johnston pointed out, which added to the overall market hesitancy.

“It feels like (OPEC) really wants to have headlines every couple of days,” Johnston said. “But the market reaction to them at this point is waiting for anything (tangible) to actually show up.”

Both Brent and WTI had traded higher earlier in Monday’s session after US President Donald Trump said he agreed to extend a deadline for trade talks with the European Union until July 9, marking another temporary trade policy reprieve.

The extension eased concerns that US tariffs on the EU could hit fuel demand.

Global markets climbed on Monday and the euro rallied.

“Trump’s pivot, by postponing higher tariffs for the EU, and his comments on possible sanctions on Russia are moderately supporting crude prices today,” UBS analyst Giovanni Staunovo said.

Trump separately said in a social media post that Russian President Vladimir Putin had “gone absolutely CRAZY” by unleashing the largest aerial attack of the war on Ukraine and that he was weighing new sanctions on Moscow.

(Reporting by Amanda Stephenson in Calgary; Additional reporting by Ahmad Gaddar in London; Sam Li in Beijing, and Florence Tan in Singapore; Editing by Barbara Lewis, Bill Berkrot, and Cynthia Osterman)

Gold falls after Trump extends tariff deadline on EU goods

Gold prices fell on Monday after US President Donald Trump reversed course on his threat to impose 50% tariffs on goods from the European Union from June 1, reducing demand for the safe-haven asset.

Spot gold was down 0.8% at USD 3,329.78 an ounce, as of 1036 GMT. US gold futures GCcv1 fell 1.1% to USD 3,329.20.

“I would call it a range-trading day,” said Giovanni Staunovo, UBS analyst, attributing the modest drop in prices to Trump’s decision to delay the imposition of higher tariffs on the EU.

“With US Memorial Day, activity is likely to be on the lower end today.”

Markets in the United States and Britain were closed on Monday due to public holidays.

Trump on Sunday restored a July 9 deadline to allow for talks between Washington and the European Union to produce a deal.

Gold prices recorded their best week in six last week, after Trump renewed tariff threats on EU goods and said he was considering a 25% tariff on any Apple iPhones that are sold in the US but not made there.

The dollar index fell to a near one-month low against its rivals.

“We still look for higher prices over the coming months, expecting the yellow metal to retest the level of USD 3,500/oz,” Staunovo said.

Meanwhile, China’s net gold imports via Hong Kong more than doubled in April from March, and were the highest since March 2024, Hong Kong Census and Statistics Department data showed on Monday.

Citi on Sunday upgraded its zero-to-three-month price target for gold back to USD 3,500/oz – from USD 3,150 on May 12 – amid US tariff policies, geopolitical risks, and concerns around the US budget. The bank expects gold prices to consolidate between USD 3,100/oz and USD 3,500/oz.

Geopolitical risks include the war in Ukraine. Russia attacked Ukraine for a third night in a row, Ukrainian regional officials and emergency services said, a day after the biggest aerial attack of the war so far killed at least 12 people.

Spot silver fell 0.5% to USD 33.31 an ounce, platinum was down 0.8% to USD 1,086.2, and palladium lost 0.7% to USD 985.51.

(Reporting by Anmol Choubey in Bengaluru, additional reporting by Ishaan Arora; Editing by Janane Venkatraman and Susan Fenton)

Gold rises over 2% on safe-haven flows after Trump’s renewed tariff threats

Gold prices rose more than 2% on Friday and logged their best week in six, as investors sought the safe-haven asset amid renewed tariff threats from US President Donald Trump and a weaker dollar.

Spot gold gained 2.1% to USD 3,362.70 an ounce by 1356 ET (1756 GMT). Bullion rose 5.1% this week to touch an over two-week high.

US gold futures settled 2.1% higher at USD 3,365.8.

“Trump has been on a tear the last 24 hours. Threatening 50% tariffs on the EU as of June 1, biting Apple and hammering Harvard has stocks in a black mood, which is great for gold,” said Tai Wong, an independent metals trader.

“Renewed tariff concerns on a low-liquidity day ahead of the long weekend can magnify moves.”

Global stocks tumbled after Trump recommended 50% tariffs on European Union imports from June 1. Trump also said that Apple would pay a 25% tariff on iPhones that are sold in the US but not made there.

The dollar eased 0.9%, making greenback-priced gold cheaper for foreign currency holders.

On Thursday, the Republican-controlled US House of Representatives passed a sweeping tax and spending bill that would add trillions of dollars to the country’s debt.

Gold’s appeal as a safe-haven asset increases with geopolitical and economic uncertainty.

“If we break above USD 3,500 mark, we can get a clean shot up to USD 3,800,” Daniel Pavilonis, senior market strategist at RJO Futures, said.

Platinum added 1.2% to USD 1,094.05 after hitting its highest level since May 2023 earlier in the session.

“Above ground inventories (of platinum) have fallen to quite low levels and this is just triggering a physical tightness in the market,” said Giovanni Staunovo, UBS analyst.

Spot silver rose 1.1% to USD 33.44, while palladium slipped 1.6% to USD 998.89. Both metals posted weekly gains.

(Reporting by Sarah Qureshi, Ashitha Shivaprasad, and Ishaan Arora in Bengaluru; Editing by Leroy Leo, Sahal Muhammed, and Vijay Kishore)

Yields ease on growth concerns as Trump threatens more tariffs

Longer-dated US Treasury yields fell on Friday after President Donald Trump said he may enact tariffs on smartphone giant Apple and imports from the entire European Union, raising concerns about slowing economic growth.

Trump threatened to impose a 25% tariff on Apple for any iPhones sold but not manufactured in the United States. More than 60 million phones are sold in the United States annually, but the country has no smartphone manufacturing.

Trump also said he would recommend a 50% tariff on the European Union to begin on June 1, which would result in stiff levies on luxury items, pharmaceuticals and other goods produced by European manufacturers.

“Today is probably a response to some of the threats from Trump to the EU and Apple and concerns over hurt growth,” said Mike Sanders, head of fixed income at Madison Investments.

Friday’s drop in yields comes after a choppy week that saw longer-dated yields rise on concerns about the deteriorating US fiscal outlook.

“The back end of the yield curve is really responding to the fiscal situation here in the States and that the deficit is not going to be in a better situation. We’re still probably spending too much as a country and long-term investors are getting concerned,” said Sanders.

“We could spend less, which doesn’t seem likely, or we could somewhat inflate our way out of it, and that’s bad for long-term bondholders,” he said.

The House of Representatives passed a tax and spending bill on Thursday that would add trillions to the US debt load. US Senate Republicans said they will seek substantial changes to the bill.

Thirty-year bonds have taken the brunt of the selloff and posted the largest weekly increase in yields since April 7.

Moody’s Investors Service last Friday cut the United States’ sovereign rating from the top “Aaa,” citing the deteriorating fiscal outlook.

The prospect of inflation remaining sticky has also weighed on demand for US bonds as the Trump administration negotiates trade deals that are expected to retain some tariffs.

Bonds sold off sharply in the aftermath of Trump’s April 2 “Liberation Day” announcement of larger-than-expected tariffs, before recovering somewhat when most of the trade levies were paused until July 7.

The 2-year note yield, which typically moves in step with interest rate expectations, was little changed on the day at 3.998%.

The yield on benchmark US 10-year notes fell 3.6 basis points to 4.517%. It reached 4.629% on Thursday, the highest since February 12.

The yield curve between two-year and 10-year notes flattened to 52 basis points.

The 30-year bond yield fell 2.2 basis points to 5.042% after hitting 5.161% on Thursday, the highest since October 2023.

The bond market closed early on Friday and will be closed on Monday for the US Memorial Day holiday.

Whether longer-dated yields will maintain upward momentum may depend on economic data. If hard data begins to reflect a weakening economy or labor market, traders are likely to bring forward expectations on Federal Reserve interest rate cuts, which would also boost demand for US Treasury debt.

Higher inflation, by contrast, would likely keep the Fed on hold for the foreseeable future. Fed funds futures traders see the US central bank as most likely resuming interest rate cuts in September.

Businesses expect rising input costs and anticipate raising their own prices as well, St. Louis Fed President Alberto Musalem said on Friday.

Chicago Fed President Austan Goolsbee said US firms want consistency in trade policy before making big investments or other decisions.

The Treasury will sell USD 183 billion in short- and intermediate-dated debt next week, including USD 69 billion in two-year notes on Tuesday, USD 70 billion in five-year notes on Wednesday and USD 44 billion in seven-year notes on Thursday.

(Reporting By Karen Brettell; Editing by Mark Porter and Leslie Adler)

Global equity funds post their biggest weekly outflow in six weeks

Global equity funds have seen weekly outflows for the first time in six weeks, pressured by rising US Treasury yields and mounting concerns over the US debt burden and tax-cut legislation, following Moody’s downgrade of the US sovereign credit rating.

According to LSEG Lipper, global equity funds saw USD 9.4 billion in net outflows, a sharp reversal from more than USD 20 billion in inflows the previous week.

US equity funds led the retreat, with USD 11 billion in redemptions, followed by USD 4.6 billion from Asian funds. European equity funds, on the other hand, received USD 5.4 billion in inflows.

“We suspect investors will be more cautious about piling into the US stock market after the turmoil in April, especially given concerns around fiscal policy,” said John Higgins, chief markets economist at Capital Economics.

“Those worries have coincided with another surge in long-dated Treasury yields this week following Moody’s downgrade of the US’ sovereign credit rating and a poorly received 20-year auction,” he said.

The 30-year Treasury yield climbed to a 19-month high on Thursday, coming within a few basis points of its highest level since 2007, after the House of Representatives passed a tax-and-spending package that intensified debt concerns.

In contrast to equities, global bond funds attracted USD 21.6 billion in inflows, indicating that investors see bonds as appealing at current yield levels. US bond funds took in USD 7.6 billion, European bond funds added USD 11 billion, and Asian bond funds saw USD 1.8 billion in net inflows.

By category, US government bond funds received USD 2.8 billion, US high-yield bond funds drew USD 1.2 billion, and European corporate bond funds gained USD 1.5 billion.

Money market funds also rebounded, taking in USD 18.1 billion, following USD 34 billion in outflows the previous week.

However, gold and precious metals commodity funds saw USD 1.7 billion in outflows, marking their third consecutive week of redemptions.

Emerging market (EM) bond funds extended their winning streak with a fourth straight week of inflows, adding USD 403 million, while EM equity funds posted minor outflows. Still, EM equity funds have attracted USD 10.6 billion year-to-date, a 43% increase from the same period last year.

“The renewed interest in EM is partially due to the concern people have about the end of US exceptionalism and lack of visibility with regards to US ambition,” said Alison Shimada, portfolio manager at Allspring Global Investments.

(Reporting By Patturaja Murugaboopathy in Bengaluru)

Oil falls on stronger USD, possibility of higher OPEC+ output

May 23 – Oil prices slipped on Friday, weighed down by a stronger US dollar and the possibility that OPEC+ will further increase its crude oil output.

Brent futures fell 37 cents to USD 64.07 a barrel by 0015 GMT. US West Texas Intermediate crude futures lost 39 cents to USD 60.81.

Brent was down 2% on the week, and WTI was 2.7% lower.

The US dollar strengthened against a basket of currencies on Thursday, boosted by the passage of President Donald Trump’s bill for tax and spending cuts by the House of Representatives.

Oil typically trades inversely with the dollar because a stronger greenback makes the commodity more expensive for non-US buyers.

A Bloomberg News report that OPEC+ was considering another large production increase at a meeting on June 1 also pushed oil prices lower.

Increasing output by 411,000 barrels a day (bpd) for July was among the options discussed, but no final agreement has yet been reached, the report said, citing delegates.

Reuters previously reported that OPEC+ would accelerate oil hikes.

A large crude oil build in the US earlier in the week also weighed on oil prices.

US crude oil storage demand has surged in recent weeks to levels similar to the COVID-19 pandemic, according to data from storage broker The Tank Tiger, as traders brace for a flood of increased supply in coming months from the Organization of the Petroleum Exporting Countries and its allies.

On Friday, the market will watch for US oil and gas rig count data from Baker Hughes that is used as an indicator for future supply.

(Reporting by Laila Kearney; Editing by Tom Hogue)

No place to hide from any China-Taiwan conflict, investors say

SINGAPORE – Foreign investors could once barely imagine that China would invade neighboring Taiwan, but with Donald Trump as president of the United States, many view it as a tail-risk scenario they must prepare for, although they cannot find ways to do so.

The democratically-governed island has long been a point of contention in US-China relations, which have worsened since Trump entered the White House in January and launched trade tariffs that have rattled markets.

Investors fear that if China attempts to take over what it considers “sacred” territory, it risks a war that ushers in the end of Taiwan as a market with its own currency and identity, while the only other alternative is peace and the status quo.

For investors, the choice therefore is to stay out completely or stay invested and hope for the best.

The risk of any invasion is difficult to hedge, said Mukesh Dave, chief investment officer at Aravali Asset Management, a global arbitrage fund based in Singapore.

“You can’t settle any trades, the currency might disappear altogether,” he said. “You either carry on like it’s business as usual, or stay away.”

The odds of China invading Taiwan have risen to 12% on betting platform Polymarket from close to none earlier this year.

Skittish foreign investors have pulled nearly $11 billion out of Taiwan stocks this year, although much of that was fueled by concerns over tariffs and the economy and they made a tentative return in May.

The benchmark index is down 6% this year.

While the United States has long stuck to a policy of “strategic ambiguity,” on Taiwan, not making clear whether it would respond militarily to an attack, Trump’s predecessor, Joe Biden, said during his time in office that US forces would defend the island if China were to attack.

Rising geopolitical tensions from Trump’s talk of a new global order and his disregard for Russia’s takeover of swathes of Ukraine have raised doubts about such US protection for Taiwan.

While Taiwan has lived under the threat of Chinese invasion since 1949 when the defeated Republic of China government fled there after losing a civil war with Mao Zedong’s communists, the two sides have not exchanged shots in anger for decades.

Yet, tension has simmered across the Taiwan Strait that separates the island from China. China’s two-day war games around Taiwan in April further fueled investor worries.

The latest barbs came this week as Taiwan President Lai Ching-te used a news conference marking his first year in office to pledge peace with China, only to have China’s Taiwan Affairs Office say his remarks were a “two-faced tactic” and that Taiwan cannot “stop the inevitable trend of national reunification.”

Lai, whom China calls a “separatist,” rejects Beijing’s sovereignty claims, saying only the island’s people can decide their future.

Goldman Sachs’ Cross-Strait Risk Index, which gauges the intensity of geopolitical risk by counting the number of news articles mentioning tension, has been rising since Trump won the US election last year.

“If aggression toward Taiwan occurs, the investment decision becomes binary: stay exposed and absorb extreme volatility, or exit swiftly to preserve capital,” said Steve Lawrence, chief investment officer of Balfour Capital Group.

Crown jewel

The Taiwan investment rationale centers on Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker and the semiconductor industry’s crown jewel.

TSMC, which counts Nvidia and Apple as major clients and whose stock is listed in Taipei and New York, powered the stock market to record highs earlier this year.

“TSMC is so big that the expectation among investors is the United States will defend Taiwan, and defend it strongly,” said Dave of Aravali. “That is the hope.”

Yet TSMC has been in Trump’s crosshairs as he unleashed tariffs in April and later delayed some duties to negotiate with foes and allies alike.

Local fund managers say while there may be no way for investors to hedge against an actual war, they do have options to hedge against possible market declines driven by fear of war.

However, Li Fang-kuo, chairman of Uni-President’s 1216.TW securities investment advisory unit in Taiwan, is skeptical of the need for such hedging, as he believes foreign investors are misreading the level of risk of a cross-strait war.

“We shouldn’t interpret it from a geopolitical risk perspective. The key issue is the tariffs.”

Rich Nuzum, global chief investment strategist at pension fund adviser Mercer, said his clients that have looked at the risk found the best option was to diversify.

“I think stress-testing for crisis is being done more and more.”

(Reporting by Ankur Banerjee, Rae Wee, Tom Westbrook and Vidya Ranganathan in Singapore, Faith Hung in Taipei; Editing by Vidya Ranganathan and Clarence Fernandez)

US yields edge up as fiscal concerns remain in focus

Longer-dated US Treasury yields edged higher on Tuesday on concerns that a tax-cut bill being debated in Congress will worsen the US budget deficit at a faster pace than previously expected and as corporate debt supply picked up.

President Donald Trump pressed his fellow Republicans to unite behind the sweeping bill, but apparently failed to convince a handful of holdouts who could still block a package that encompasses much of his domestic agenda.

Moody’s Investors Service on Friday cut the US sovereign credit rating from the top “Aaa” rating, citing a worsening debt and fiscal outlook.

The downgrade brought focus back to the package that is working its way through Congress and the scope of the deficits, said Jan Nevruzi, US rates strategist at TD Securities in New York.

“While we’re waiting for everything from the tariffs to make its way through data, the fiscal story is certainly getting a lot more attention,” he added.

Concerns over the tax bill helped to push yields higher on Monday, with 30-year yields reaching an 18-month high.

Investors and Federal Reserve officials are waiting to see how trade tariffs imposed by Washington and counter-duties from other countries will impact the economy as the Trump administration also makes deals to reduce levies with some trading partners.

It could take months before the impact of tariffs is clearly seen in US economic data.

High uncertainty over the Trump administration’s policies, including trade, could slow the economy significantly as households and businesses put spending and investment decisions on hold, said St. Louis Federal Reserve Bank president Alberto Musalem.

Corporate debt supply weighed on the market as companies rushed to sell bonds before markets slowed down ahead of Monday’s US Memorial Day holiday.

The Treasury Department will also sell USD 16 billion in 20-year bonds on Wednesday and USD 18 billion in 10-year Treasury Inflation-Protected Securities on Thursday.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 1.7 basis points to 3.966%.

The yield on benchmark US 10-year notes rose 0.2 basis points to 4.477%. It reached 4.564% on Monday, the highest since April 11.

The yield curve between two-year and 10-year notes steepened to 51 basis points.

The 30-year bond yield gained 2.3 basis points to 4.965%. On Monday, it touched 5.037% in intra-day trading, the highest since November 2023.

(Reporting By Karen Brettell, Editing by Nick Zieminski and Nia Williams)

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