US Treasury prices dip on budget bill worries

NEW YORK – US Treasury prices fell on Wednesday, pushing yields to multi-week highs, as investors grew concerned about growing disagreements on the Trump administration’s tax cut and budget legislation currently in Congress.

Benchmark US 10-year Treasury note yields hit a six-week high, punching through a key 4.5% support level. It was last up 3.7 basis points (bps) at 4.536%.

On the front end of the curve, the two-year yield, which typically moves in step with interest rate expectations, rose 4.2 bps to 4.059%, after earlier touching its highest since late March.

Republicans in the US Congress on Wednesday advanced elements of President Donald Trump’s sweeping budget package after a debate that lasted through the night, as a key committee voted along party lines to approve tax cuts that would add trillions of dollars to the US debt.

The House of Representatives Ways and Means Committee approved the first version of the tax cut bill, but a clearer picture of the size of future budget deficits depends on discussions of spending and potentially steep cuts to the Medicaid health program.

“I’m optimistic that Congress can approve some spending cuts, a lot of Republicans are keen to reduce the size of the state,” said Kim Rupert, managing director, global fixed income analysis, at Action Economics in San Francisco.

If the budget bill shows some control over the debt, the fears may be overblown and yields would not have to go higher, Rupert added.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, steepened to 48.1 bps, compared with 46.3 late on Tuesday. The curve has steepened for a second straight day.

Apart from worries about the budget bill, some analysts said higher Treasury yields could also be a reflection of diminishing fears of recession in the aftermath of the
90-day pause
in high tariffs between the US and China on Monday.

That should affirm expectations the Federal Reserve will take its time cutting interest rates in this current easing cycle.

Since the US-China tariff reprieve, markets on US rate futures have been betting that the Fed will cut twice this year, according to LSEG calculations, with the first easing likely happening in September with a roughly 70% probability.

Market participants will now look to Thursday’s new releases of retail sales and producer price index (PPI), which will show how Trump’s tariff policy affected inflation and consumption.

“Investors are looking for signs in the upcoming data releases of further inflationary pressures coming from tariffs”, said Tom di Galoma, managing director of rates and trading at Mischler Financial Group in Park City, Utah.

Some Treasury investors, meanwhile, have been diversifying fixed-income holdings out of the United States into Europe, with more supply coming this week from Germany and France, he added.

On Wednesday, Fed Vice Chair Philip Jefferson stressed the uncertainty surrounding the future path of inflation, including how persistent upward pressure from tariffs will be on prices.

“While trade policy has received the bulk of recent attention, I remain focused on the aggregate effect from the totality of different government policy changes, including trade, immigration, regulatory, and fiscal policies”, Jefferson said.

Walmart WMT.N earnings expected for Thursday may be important even for Treasury markets, Rupert of Action Economics noted, as the company’s numbers and comments may show how US consumers are reacting to tariffs and the extent to which companies are passing through higher costs.

(Reporting by Tatiana Bautzer; Editing by Rod Nickel, Gertrude Chavez-Dreyfuss and Diane Craft)

US yields rise as tariff outlook outweighs tame inflation

NEW YORK – US Treasury yields rose on Tuesday as lower-than-expected April inflation data overshadowed expectations that tariffs will fuel higher prices in the coming months, reinforcing bets that the Federal Reserve will take its time resuming its easing cycle.

The benchmark 10-year yield, which initially fell after the Labor Department released its April Consumer Price Index, was up 2.2 basis points (bps) at 4.479% in late afternoon trading. The two-year yield, which typically tracks the interest rate outlook, was little changed at 4.006%.

Although the headline numbers showed limited immediate impact from the Trump administration’s sharp tariff rises announced last month, prices of certain goods such as furniture and audio and video products rose due to the import levies, data showed.

The consumer price index increased 0.2% last month after dipping 0.1% in March, the first decline since May 2020. Economists polled by Reuters had forecast the CPI would rise 0.3%. In the 12 months through April, the CPI climbed 2.3% after rising 2.4% in the 12 months through March.

Core CPI inflation increased 2.8% on a year-on-year basis in April after rising 2.8% in March.

Analysts still expect inflation to pick up in the coming months. “Some of the positive aspects that contributed to a lower April CPI do not seem sustainable, such as the drop in used vehicle prices,” said Andy Schneider, senior US economist at BNP Paribas. In April, wholesale used vehicle prices rose, but prices for final buyers fell.

Inflationary pressure will persist even as the US-China deal made over the weekend showed both countries want to avoid a trade war. “Tariffs are still going to be significantly higher than they were in January,” Schneider added.

Markets estimate the Federal Reserve will not cut interest rates until later in the year, potentially twice in 2025. The first 25 basis points cut is expected at its September meeting, according to CME’s FedWatch tool. Schneider believes the Fed will not be able to cut rates this year.

“The report basically indicates that the Fed needs to be very cautious and that the stand that they have taken is probably the right course for now,” said Brian Jacobsen, chief economist at Annex Wealth Management.

As trade war fears recede, investors are expected to focus on budget and tax cut legislation discussions in Congress. Public debate began on Tuesday in the US House of Representatives. Congress’ bipartisan Joint Tax Committee estimates the tax cuts would cost USD 3.72 trillion.

“The CPI was softer than expected, which is good news, but markets are still cautious and looking for clarity on the longer-term policy path,” said Subadra Rajappa, head of US rates strategy at Societe Generale. Stocks got more of a boost from the inflation report than the bond market, she noted.

A closely watched part of the US Treasury yield curve measuring the gap between two- and 10-year notes, seen as an indicator of economic expectations, steepened 46.9 bps, suggesting that the Fed is on track to cut interest rates this year.

US yield curves typically steepen in an easing cycle, with the front end, such as the two-year tied to Fed rate cuts.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.395% after closing at 2.35% on May 12.

The US dollar 5 years forward inflation-linked swap, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed’s quantitative easing, was last at 2.477%.

(Reporting by Tatiana Bautzer; Additional reporting by Chuck Mikolajczak; Editing by Andrew Cawthorne, Nick Zieminski, Susan Fenton, and Richard Chang)

Foreign investors return to Asian equities in May, reversing prolonged outflows

Asian equities are attracting foreign investments so far in May, marking a sharp reversal from outflows in the first four months of the year, as optimism over progress in trade talks has eased fears of US tariffs fuelling a global economic slowdown.

Foreign investors have purchased approximately USD 6.22 billion worth of equities across India, Taiwan, South Korea, Thailand, Indonesia, Vietnam, and the Philippines so far this month through May 12, according to LSEG data.

Leading the rebound, Taiwan has attracted a net USD 4.43 billion in foreign inflows, ending a four-month streak of outflows, while Indian equities have also seen a substantial USD 1.68 billion in foreign investment.

Regional stock markets suffered around USD 54.33 billion in foreign outflows during the first four months of the year, the largest exodus for the period since at least 2010.

After a turbulent start to the year due to concern about US President Donald Trump’s trade policies, Asian equities have staged a strong recovery. The MSCI Asia-Pacific Index has surged 18% since April 7, driven by a 90-day halt on higher US tariffs and progress in trade negotiations.

The US and China agreed to temporarily reduce steep reciprocal tariffs and cooperate to prevent further disruption to the global economy, with the US lowering levies on Chinese imports to 30% from 145% and China cutting duties to 10% from 125% for 90 days.

However, some analysts caution that uncertainty persists, as trade negotiations are expected to be prolonged and it remains too early to determine whether the tariff reductions will be permanent.

“News flow around trade deals has increased, stress measures have moderated from recent extremes, the dollar has weakened, and portfolio flows show tentative signs of re-risking,” Goldman Sachs said in a note.

But it noted that the combination of subdued company earnings growth and complacent valuations indicates a potential for near-term market pullbacks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Emelia Sithole-Matarise)

Crude oil climbs more than USD 1.60 a barrel on tariff cuts, economic outlook

HOUSTON – Crude oil futures climbed more than USD 1.60 a barrel on Tuesday, lifted by a temporary cut in US-China tariffs and a better-than-expected inflation report.

Brent crude futures settled at USD 66.63 a barrel, up USD 1.67, or 2.57%. US West Texas Intermediate (WTI) crude finished at USD 63.67, up USD 1.72 or 2.78%.

The two benchmarks rose by about 4% or more in the previous session after the US and China agreed on sharp reductions to their import tariffs for at least 90 days, which also boosted stocks on Wall Street and the dollar.

“We didn’t participate as much as other markets did yesterday in the China boom, so we’re catching up today,” said John Kilduff, a partner with Again Capital LLC. “Also the data this morning gives the Fed room to potentially begin making some moves.”

The US Labor Department reported on Tuesday that the Consumer Price Index rose 2.3% in the 12 months through April, the smallest year-over-year gain in four years, leading Wall Street firms like JPMorgan Chase and Barclays to cut their forecasts of a US recession in the coming months.

The tamer inflation reading will likely be greeted with some relief by the Federal Reserve, which has kept its benchmark interest rate unchanged since last cutting it in December. The US central bank has paused its rate cuts amid concerns that the trade war could reignite inflation.

“All the numbers are bullish today,” said Phil Flynn, senior analyst with Price Futures Group. “The inflation number, the economic data are very supportive.”

The Organization of the Petroleum Exporting Countries and its allies, a group called OPEC+, are planning to boost oil exports in May and June, which is seen as possibly limiting oil’s upside.

OPEC has raised oil output by more than previously expected since April, with its May output likely to increase by 411,000 barrels per day.

Meanwhile, sources told Reuters that Saudi Arabia’s crude oil supply to China will hold steady in June after hitting its highest level in more than a year in the previous month after an OPEC+ decision to increase output.

The kingdom is the second-largest crude supplier to China behind Russia.

Elsewhere, signs broadly point to demand for refined fuel remaining strong.

“Despite the deteriorating outlook for crude demand, positive signals from the fuel markets cannot be overlooked,” JPMorgan analysts said in a note.

“Although international crude prices have declined by 22% since their peak on January 15, both refined product prices and refining margins have remained stable.”

Reduced refining capacity – mostly in the US and Europe – is tightening gasoline and diesel balances, increasing reliance on imports and raising susceptibility to price spikes during maintenance and unplanned outages, they added.

(Reporting by Erwin Seba in Houston; Additional reporting by Saheer Dareen, Trixie Yap and Stephanie Kelly; Editing by Deepa Babington, Paul Simao and Matthew Lewis)

Gold rebounds on bargain-hunting, softer US inflation data

Gold prices rose on Tuesday on bargain-hunting after a sharp loss in the previous day, while softer-than-expected inflation data from the US also lent support.

Spot gold rose 0.4% to USD 3,246.95 an ounce as of 1357 ET (17:57 GMT), after falling as low as USD 3,207.30 on Monday.

US gold futures settled 0.6% higher at USD 3,247.8.

“We had a big correction in gold on Monday on the news that there is a deal made between the US and China,” Bart Melek, head of commodity strategies at TD Securities, said.

“However, tariffs (on China) are still 30%, which is quite negative for the economy.”

The US and China on Monday said they would pause their tariffs for 90 days. Following the talks in Geneva over the weekend, the US said it will cut tariffs on Chinese imports to 30% from 145%, while China said it would cut duties on US imports to 10% from 125%.

Bullion had shattered multiple record highs in 2025, owing to concerns over economic slowdown following US President Donald Trump’s sweeping tariffs, strong central bank buying, geopolitical tensions and increased flow into gold-backed exchange-traded funds.

Elsewhere, US consumer price index increased 0.2% last month, the Labor Department’s Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast the CPI would rise 0.3%.

“The report does lean slightly friendly for the precious metals markets because it’s not a problematic inflation report that would give the Federal Reserve pause on cutting interest rates,” Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note.

Financial markets expect the central bank to resume its policy easing in September.

Lower interest rates increase non-yielding bullion’s appeal.

Spot silver rose nearly 1% to USD 32.89 an ounce, platinum climbed 1.4% to USD 985.92, and palladium gained 1% to USD 955.15.

(Reporting by Sarah Qureshi and Anjana Anil in Bengaluru; Editing by Sahal Muhammed and Shailesh Kuber)

Oil prices ease off 2-week highs after US, China pause tariff war

Oil prices eased on Tuesday from a two-week high reached during the previous session after the US and China agreed to temporarily slash tariffs, sparking optimism that a trade war between the world’s two biggest economies would come to an end.

The US and China agreed to slash steep tariffs for at least 90 days, sending Wall Street stocks, the US dollar and crude prices sharply higher on Monday.

But underlying schisms that led to the dispute remain, including the US trade deficit with China and US President Donald Trump’s demand for more action from Beijing to combat the US fentanyl crisis.

Brent crude futures dropped 14 cents, or 0.2%, to USD 64.82 per barrel by 0011 GMT. US West Texas Intermediate (WTI) crude fell 13 cents, or 0.2%, to USD 61.82.

Both benchmarks closed about 1.5% higher on Monday at their steepest settlements since April 28. The gains come during a turbulent time for global oil markets.

Last month, oil prices fell to a four-year low on investor worries that the US-China trade war could depress economic growth and oil demand. Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) decided to boost oil output by more than previously expected.

(Reporting by Stephanie Kelly; Editing by Jacqueline Wong)

BOJ policymaker called for keeping rate-hike stance, May meeting summary shows

TOKYO – The Bank of Japan should not turn overly pessimistic about the economic outlook and stand ready to raise interest rates further depending on shifts in US trade policy, one of its board members was quoted as saying at a April 30-May 1 policy meeting.

“The BOJ will enter a temporary pause in rate hikes due to slowing US growth. But it shouldn’t be too pessimistic, and must conduct monetary policy in a nimble and flexible manner such as by resuming rate hikes in response to changes in US policy,” the member said, according to a summary of opinions released on Tuesday.

Another opinion said the BOJ’s policy path “may change at any time” because the outlook for Japan’s economy and prices could quickly turn positive or negative depending on developments surrounding US tariffs.

“There’s no change to the BOJ’s rate-hike stance as our projection shows inflation achieving our 2% target and real interest rates are deeply negative,” a third opinion showed.

At the April 30-May 1 meeting, the BOJ kept interest rates steady at 0.5% and sharply cut its growth forecasts, suggesting uncertainty surrounding US tariffs and the hit to exports could keep policy in a holding pattern for some time.

(Reporting by Leika Kihara; Editing by Sonali Paul & Shri Navaratnam)

Yields rise as US/China trade deal punishes safe-havens

NEW YORK – US Treasury yields rose on Monday to the highest levels in a month after the United States and China agreed to lower trade tariffs on one another during a 90-day pause, triggering a rush of investor cash into risk assets and hitting safe havens like bonds.

The yield on the benchmark US 10-year Treasury note rose 8.6 basis points to 4.461%, amid a strong rally that pushed stocks and the dollar higher.

The world’s two largest economies said in a joint statement that they had reached a deal to impose a 90-day pause on tariffs and reciprocal duties would drop sharply, giving investors some confidence that a full-scale trade war may have been averted.

US Treasury Secretary Scott Bessent, speaking after talks with Chinese officials in Geneva, told reporters the two sides had reached the deal that was outlined in a joint statement and that reciprocal rates would drop by 115 percentage points.

President Donald Trump said on Monday that the deal includes larger acquisitions of US agricultural products by China and other market access issues.

“Yields are rising because of investors’ risk-on movement, reversing what had been happening since Liberation Day,” said Tom di Galoma, managing director at Seaport Global Holdings.

The 10-year yield is still well above where it was prior to Trump’s April 2 “Liberation Day,” when he unveiled a flurry of tariffs on US trading partners. At that point, 10-year yields were at 4.15%.

Adam Hetts, Global Head of Multi-Asset and Portfolio Manager at Janus Henderson, said investors are cautiously optimistic, adding risk but in a measured way.

Now markets will try to estimate the damage to economic growth created by the volatility. “So far, we have seen some damage to the soft data, consumer sentiment, but not sharp changes in hard data. We are going to understand the impact on the economy over the next months.” Hetts said.

On Tuesday, the April Consumer Price Index will show if “Liberation Day” had any immediate impact on inflation, but it will take more data releases to have a clearer picture. Yesterday, markets were pricing the first potential interest rate by the Fed in September, and up to two rate cuts through the end of the year, according to CME’s FedWatch tool.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, rose 11.3 basis points to 3.996%. Other investor safe havens such as the Swiss franc fell.

A closely watched part of the Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 46.3 basis points, flattening from 48.7 basis points late Friday.

(Reporting by Tatiana Bautzer, additional reporting by Amanda Cooper and Medha Singh; Editing by Kirsten Donovan, Andrea Ricci, and Nick Zieminski)

Risk-on revelers rejoice as US-China reach a deal

The S&P 500 index hit its highest level since early March on Monday as a crucial US-China agreement to slash tariffs put investors at ease after weeks of uncertainty around the future of global trade.

The US will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on US imports will fall to 10% from 125%, the two countries said on Monday. The new measures are effective for 90 days.

With this, the Dow rallied 2.8%, the SPX jumped more than 3%, and the Nasdaq surged more than 4%.

Nearly all S&P 500 sectors ended green with consumer discretionary, up more than 5.5%, and tech, up more than 4.5%, posting the biggest jumps.

Under the surface, transports and chips were especially strong with both surging around 7%.

Amid the risk-on sentiment and waning uncertainty, defensive sectors lagged. Real estate and staples ended just above flat. Utilities finished red.

The CBOE market volatility index fell below 19.00, and is on pace for its lowest close since March 25.

And gold stocks lost some luster. The HUI slid more than 8%.

Meanwhile, on the charts, the three major indexes ended back above their 200-day moving averages (DMA).

It was the Dow’s first close above this closely followed long-term moving average since April 2. It was the S&P 500’s first close above its 200-DMA since March 25, and the Nasdaq ended above its 200-DMA for the first time since March 5.

With Monday’s strength, the SPX is now only down 4.88% from its February 19 record close. The Dow is down 5.78% from its December 4 record finish, and the Nasdaq is down 7.26% from its December 16 record close.

On April 8, the cycle closing lows, these indexes finished down 18.9%, 16.4%, and 24.3% from their record closes.

In any event, the latest read on consumer prices is due on Tuesday. Expectations call for April month-over-month headline CPI to heat up to 0.3% from -0.1% last month.

(Terence Gabriel is a Reuters market analyst. The views expressed are his own.)

Oil prices rise 3% on support from US-China trade hopes

NEW YORK – Oil prices rose around 3% on Thursday, buoyed by hopes of a breakthrough in looming trade talks between the US and China, the world’s two largest oil consumers.

Brent crude futures settled up USD 1.72, or 2.8%, at USD 62.84 a barrel. US West Texas Intermediate crude rose USD 1.84, or 3.2%, to USD 59.91.

US Treasury Secretary Scott Bessent will meet with China’s top economic official on May 10 in Switzerland for negotiations over a trade war that is disrupting the global economy. Optimism around those talks was providing support to the market, said SEB analyst Ole Hvalbye.

The countries are the world’s two largest economies and fallout from their trade dispute was likely to lower crude consumption growth.

Analysts cautioned that the recent tariff-driven volatility in the oil market was not over.

“The global risk premium that was pushing oil prices up and down during the past couple of years has been replaced by a tariff premium that will also be fluctuating in response to the latest headlines out of the Trump administration,” Jim Ritterbusch, of US energy consultancy Ritterbusch and Associates, said in a note.

In another trade development, US President Donald Trump and British Prime Minister Keir Starmer announced a “breakthrough deal” on trade that leaves in place a 10% tariff on goods imported from the UK while Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to US goods.

On the supply front, the Organization of the Petroleum Exporting Countries and its allies in OPEC+ will increase its oil output, pressuring prices.

OPEC oil output edged lower in April despite a scheduled output hike taking effect, a Reuters survey found, led by a cut in Venezuelan supply on renewed US attempts to curb the flows and smaller drops in Iraq and Libya.

Analysts at Citi Research lowered their three-month price forecast for Brent to USD 55 per barrel from USD 60, but maintained their long-term forecast of USD 60 a barrel this year.

A US-Iran nuclear deal could drive Brent prices down toward USD 50 per barrel on increased global supply, but without a deal prices could rise to over USD 70, they added.

US sanctions on two small Chinese refiners for buying Iranian oil have created difficulties receiving crude and led them to sell product under other names, sources familiar with the matter said, evidence of the disruption that Washington’s stepped-up pressure is inflicting on Tehran’s biggest oil buyer.

(Reporting by Stephanie Kelly in New York, Seher Dareen in London, Katya Golubkova in Tokyo and Emily Chow in Singapore; Editing by David Evans and Ed Osmond, Kirsten Donovan and David Gregorio)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Quarterly Economic Growth Release: More BSP cuts to come

Monthly Economic Update: Fed catches up