Foreign investors plough USD 19.2 billion into emerging markets in May, says IIF

NEW YORK – Foreigners added USD 19.2 billion to emerging market stocks and bonds in May after an April retrenchment, a banking trade group report found, with Chinese debt and ex-China stocks emerging as the most favored assets as the trade war temporarily cooled.

The May flows, as calculated by the Institute of International Finance (IIF), compare with a USD 3.7 billion outflow in April and a USD 6.6 billion inflow in May 2024.

Chinese debt took in USD 11.1 billion, while the country’s equities pulled in USD 1.4 billion. Outside of China, stocks funneled USD 7.0 billion – their first positive inflows after seven months of losses – while debt saw a USD 300 million outflow.

The Trump administration’s early April announcement of broad tariffs on imports, and subsequent delays to those while others were hinted or imposed, triggered a bout of volatility and risk aversion that hit emerging markets selectively.

Tariffs and trade remain high on the agenda as leaders of the G7 nations meet next week in Canada.

“The underlying investor tone remains cautious in light of ongoing global uncertainty,” said Jonathan Fortun, senior economist at the IIF, in a statement accompanying the data.

“The return of positive flows in May signals a modest shift in sentiment, but one that remains highly contingent on the global monetary backdrop. Investors are not abandoning EM, but they are rotating selectively within it.”

Asia took in a net USD 11.4 billion last month, much of which was absorbed by Chinese debt. Emerging Europe saw a net inflow of USD 5.1 billion, of which USD 3.9 billion came into debt portfolios.

Africa and the Middle East took in USD 1.6 billion, and Latin America came in last at USD 1.1 billion of portfolio inflows last month.

“Within the equity space, investors appear to be recalibrating exposure toward markets with credible domestic policy anchors and limited sensitivity to global supply chain disruption,” Fortun said.

Demand for local currency bonds remains high among non-residents according to the IIF report, especially in Asia, with market support in the form of real yields and stable monetary anchors.

Total emerging markets sovereign issuance remained low at USD 10.3 billion of new deals in May, according to the data.

“Much of the (debt) issuance came in the form of opportunistic deals from higher rated sovereigns. Market access continues to be limited for lower rated names, despite an improvement in global financial conditions,” Fortun said.

“The muted supply picture has reinforced technical support for existing debt and may explain the persistent bid for local paper.”

(Reporting by Rodrigo Campos in New York; Editing by Jan Harvey)

TREASURIES-US yields drop after weak jobs, services data

ADP report shows private payrolls increased by only 37,000 jobs

ISM services PMI drops to 49.9, indicating contraction

Markets price in 74% chance of Fed rate cut in September

Updates to afternoon US trading

By Chuck Mikolajczak

NEW YORK, June 4 (Reuters) – U.S. Treasury yields fell sharply on Wednesday, after labor market data came in weaker than expected, while a separate report on the services sector unexpectedly showed contraction.

The ADP National Employment Report showed private payrolls increased by 37,000 jobs last month, well short of the 110,000 estimate of economists polled by Reuters, after a downwardly revised rise of 60,000 jobs in April, sending yields lower.

Yields then extended their declines after the Institute for Supply Management said its non-manufacturing Purchasing Managers Index dropped to 49.9 last month, below the 52.0 estimate of economists polled by Reuters. The reading was the first below the 50 threshold, which indicates contraction of the services sector, and the lowest reading since June 2024.

In addition, the ISM’s measure of prices paid for services inputs rose to 68.7, the highest level since November 2022, from 65.1 in April.

“It still doesn’t seem clear that it’s time to cut rates yet, there’s still too much uncertainty, too many unknowns,” said JoAnne Bianco, partner and senior investment strategist at BondBloxx Investment Management in Chicago.

“We haven’t actually seen the tariffs really translate into what’s happening in terms of inflation.”

The yield on the U.S. 10-year Treasury note US10YT=TWEB fell 9.5 basis points to 4.365% after dropping to 4.349%, its lowest since May 9, and was on pace for its fourth decline in five sessions.

Labor market data is also expected throughout the week, culminating in Friday’s government payrolls report.

Markets have been volatile since U.S. President Donald Trump announced a slew of tariffs on countries around the globe on April 2, only to pause some and declare new ones, with the 10-year yield touching a 3-month high of 4.629% on May 22.

In the wake of the ADP report, Trump again called for Federal Reserve Chair Jerome Powell to lower interest rates in a social media post.

The yield on the 30-year bond US30YT=TWEB shed 9.7 basis points to 4.886%.

Washington doubled tariffs on imported steel and aluminum to 50% on Wednesday, the same day by which Trump had wanted trading partners to make their best offers to avoid other import levies from taking effect in early July.

Trump is expected to speak with Chinese leader Xi Jinping, days after Trump accused China of violating a deal to roll back tariffs and trade restrictions.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 48.6 basis points.

Many Federal Reserve officials have indicated a patient approach to determining the effect the levies may be having on prices, although they have also indicated rate cuts may still be possible this year.

Markets are pricing in a roughly 75% chance of the first cut of at least 25 basis points from the central bank this year at its September meeting, according to LSEG data.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, declined 8 basis points to 3.877% after hitting a session low of 3.858%, its lowest since May 9.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities US5YTIP=TWEB was last at 2.336% after closing at 2.389% on Tuesday.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.307%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak
Editing by Rod Nickel)

((charles.mikolajczak@tr.com; @chuckmik.bsky.social;))

PRECIOUS-Safe-haven gold rises on weak data, simmering uncertainty

Trump calls China’s Xi tough, ‘hard to make a deal with’

US private payrolls post smallest gain in over two years in May

US service sector unexpectedly contracts in May

Dollar down 0.5%

Updates prices for market close

By Sherin Elizabeth Varghese

June 4 (Reuters) – Gold rose 1% on Wednesday, supported by a softer dollar and weak U.S. data, as investors grappled with mounting economic and political uncertainty.

Spot gold XAU= climbed 0.8% to $3,378.22 an ounce by 02:02 p.m. ET (1802 GMT), after rising as much as 1% earlier. U.S. gold futures GCcv1 settled 0.7% higher at $3,399.20.

The U.S. dollar index .DXY fell 0.5%, making gold cheaper for buyers holding other currencies, while benchmark U.S. 10-year Treasury yields US10YT=RR edged lower. USD/US/

“The U.S. services sector – two-thirds of the economy – contracting for the first time in a year has goosed gold a percent higher after bullion had shrugged off a weak though historically volatile ADP employment report,” said Tai Wong, an independent metals trader.

“A close back above $3,400 will prime a run for new all-time highs.”

The Institute for Supply Management said its non-manufacturing purchasing managers index dropped to 49.9 last month, the lowest reading since June 2024, while ADP data showed U.S. private employers added the fewest workers in over two years.

“There is considerable geopolitical uncertainty with Russia-Ukraine, Iran, Syria and China driving people to buy gold… and although traders may not expect gold to rise as quickly, there is still plenty of upside,” said Daniel Pavilonis, senior market strategist at RJO Futures.

U.S. President Donald Trump said his Chinese counterpart Xi Jinping was tough and “extremely hard to make a deal with”, just days after accusing Beijing of violating an agreement to roll back tariffs.

In addition, Washington doubled tariffs on steel and aluminum imports and urged trading partners to submit their “best offers” to avoid more import levies.

All eyes are on Friday’s U.S. payrolls report for clues on the Federal Reserve’s next move.

Gold, a safe-haven asset during times of political and economic uncertainty, tends to thrive in a low-interest-rate environment.

Spot silver XAG= was down 0.1% at $34.45, platinum XPT= rose 1.5% to $1,089.99, while palladium XPD= lost 1% to $1,000.55.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Shailesh Kuber and Pooja Desai)

((sherinelizabeth.varghese@thomsonreuters.com;))

POLL-Dollar to decline further on U.S. fiscal, growth and trade risks

reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/fx-polls?RIC=EUR= poll data

By Sarupya Ganguly

BENGALURU, June 4 (Reuters) – Falling demand for U.S. dollar-denominated assets will push the greenback lower in coming months, according to FX strategists surveyed by Reuters, as concerns mount about the U.S. federal deficit and debt.

U.S. President Donald Trump’s erratic tariff policies, along with the House of Representatives recently passing a tax-cut and spending bill that would add $3.3 trillion to an already-enormous $36.2 trillion debt pile, have many investors worried.

Long-term bond yields have soared on a rising ‘term premium’ – compensation for holding longer-duration debt – leading to swathes of asset outflows and a near-10% fall in the dollar against a basket of major currencies .DXY since mid-January.

Its usual close relationship with 10-year Treasury yields has also broken down.

Asked what would happen to demand for dollar-denominated assets in a May 30-June 4 poll, a near-90% majority, 59 of 66 FX strategists, said it would decline.

“It’s quite evident right now there is a ‘sell-America’ trade playing out, and how much dollar demand decreases depends on the extent to which U.S. growth is perceived to be hit by the current policies of the administration,” said Jane Foley, head of FX strategy at Rabobank.

“If the market is still anticipating the growth outlook will be undermined, the trend will be towards further dollar losses over the medium-term.”

Over 55% of analysts in a May Reuters poll also expressed concern about the dollar’s ‘safe haven’ status, up from only around one-third in April.

This month, over half of respondents upgraded their euro EUR= forecasts.

The common currency, currently $1.14, was predicted to hold steady in three months, gain about 1% to $1.15 in six and about a further 3% to $1.18 in a year.

Euro-dollar median forecasts recorded in the survey were the highest since November 2021. Only just in February, around one-third were expecting it to reach parity within a year.

But most of that has to do with the outlook for the dollar. A series of interest rate cuts this year from the European Central Bank while the Federal Reserve has stayed on hold would normally generate the opposite result on interest rate differentials.

“Over the summer, we’re expecting (U.S.) term premium risks on elevated fiscal concerns and hard labor market data starting to turn. That is a very negative combination for the dollar,” said Dan Tobon, head of G10 FX strategy at Citi.

“Our…target on euro-dollar has been $1.15, but we think it can get to $1.20. And that might happen sooner than we’re expecting if these catalysts do play out.”

Asked how a thinning dollar trade would evolve by end-June, half the strategists, 21 of 42, said there would not be much change from speculators’ current net-short position. Nineteen said there would be an increase in net-shorts, while two said decrease.

Asked which region would benefit the most from sustained dollar outflows, respondents mostly said Europe.

Despite a slight souring of sentiment owing to the Trump-led trade war, investors are still generally optimistic that infrastructure and defence spending plans, particularly in Germany, will revitalise the bloc’s long-sluggish economy.

“When you talk to clients in the European area, they feel like there’s a lot more potential positive catalysts for growth there – not just because of the money that will be spent on defence and infrastructure – but because there’s belief that’s actually the beginning of a lot of other structural changes,” Citi’s Tobon added.

Heightened uncertainty from rising U.S. inflation expectations – near their highest in at least four decades – has also effectively tied the Fed’s hands for the time being even though markets still expect two more cuts this year.

The ECB is expected to cut this week and possibly once more.

(Other stories from the June foreign exchange poll)

(Reporting by Sarupya Ganguly; Polling and analysis by Anant Chandak, Renusri K, Rahul Trivedi and Jaiganesh Mahesh; Editing by Ross Finley and Chizu Nomiyama )

((Sarupya.Ganguly@thomsonreuters.com;))

UPDATE 9-Oil settles 1% lower after US data shows large builds in fuel stocks

US gasoline, distillate stocks post big weekly builds

OPEC+ supply rises weigh on sentiment

Persistent tariff tensions stalk market

New throughout, updates prices, market activity and comments

By Arathy Somasekhar

HOUSTON, June 4 (Reuters) –
Oil prices settled down just over 1% on Wednesday after U.S. data showed surprisingly large build in gasoline and diesel inventories, swelling fuel supplies with OPEC+ planning more output and trade tensions clouding the energy demand outlook.

Brent crude futures LCOc1 closed down 77 cents, or 1.2%, at $64.86 a barrel. U.S. West Texas Intermediate crude CLc1 settled 56 cents, or 0.9% lower at $62.85.

U.S. gasoline stocks swelled by 5.2 million barrels, the Energy Information Administration said. Analysts polled by Reuters had expected a rise of 600,000 barrels.

Distillate stockpiles rose by 4.2 million barrels compared with expectations for a rise of 1 million barrels.

Crude inventories dropped by 4.3 million barrels. Analysts polled by Reuters had expected a draw of 1 million barrels.

“The report is in my view bearish, due to large builds in refined products,” Giovanni Staunovo, an analyst with UBS.

“There was a strong increase in refinery demand for crude, resulting in a large crude draw. But post-Memorial Day, the strong supply increase with weaker implied demand resulted in large refined product inventory increases,” he added.

Plans by OPEC+ producers to increase output by 411,000 barrels per day (bpd) in July were also weighing on investors.

On Tuesday, both benchmarks climbed about 2% to a two-week high, driven by worries about supply disruptions and expectations that OPEC member Iran would reject a U.S. nuclear deal proposal key to easing sanctions.

Russia posted a 35% decline in May oil and gas revenue, which could make Moscow more resistant to further OPEC+ output hikes, as such moves weigh on crude prices.

On Tuesday, the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecast as the fallout from Trump’s trade policies takes a bigger toll on the U.S. economy, which would in turn impact oil demand.

Meanwhile, U.S. President Donald Trump and Chinese leader Xi Jinping are likely to speak this week, days after Trump accused China of violating a deal to roll back tariffs and trade curbs.

U.S. economic activity has declined and higher tariff rates have put upward pressure on costs and prices in the weeks since Federal Reserve policymakers last met to set interest rates, the central bank said in its latest snapshot of the economy.

Geopolitical tensions continued to escalate. Russian President Vladimir Putin told Trump that he must
respond
to high-profile Ukrainian drone attacks on Russia’s nuclear-capable bomber fleet and a deadly bridge bombing that Moscow blamed on Kyiv.

“Overall, we see limited upside potential amid ongoing concerns about a supply glut and softening demand growth,” analyst Ole Hansen at Saxo Bank said in a note.

Meanwhile, production operations in Canada, some of which was shut-in due to wildfires, were restarting on Wednesday.

Canadian Natural Resources CNQ.TO said it has restarted its Jackfish 1 oil sands site in northern Alberta after determining wildfires in the region were a safe distance away.

Wildfires in Canada had reduced the country’s output by some 344,000 bpd, according to Reuters calculations on Tuesday.

(Additional reporting by Ahmad Ghaddar and Seher Dareen in London and Yuka Obayashi in Tokyo; editing by Jason Neely, Bernadette Baum, Paul Simao and David Gregorio)

((Seher.Dareen@thomsonreuters.com;))

Dollar edges down as trade tensions simmer ahead of jobs data

TOKYO – The dollar drifted lower on Wednesday as the market looked ahead to US employment data for immediate trading cues, while waiting on developments in President Donald Trump’s tariff negotiations with key trading partners including China.

The Trump administration has given a Wednesday deadline for countries to submit their best offers on trade, the same day a doubling of duties to 50% on imported steel and aluminium comes into effect.

Trump is also tipped by the White House to have a call this week with Chinese President Xi Jinping after the two sides accused each other of violating the terms of an agreement last month to roll back some tariffs.

In the meantime, macroeconomic indicators have returned as a driver of the US currency this week, even if trade frictions remain centre stage. The dollar slumped 0.8% against major peers on Monday following a contraction in manufacturing, only to rebound by almost the same amount overnight after a surprise increase in US job openings.

Early on Wednesday, the dollar was down 0.09% at 143.82 yen and the euro was up 0.13% at USD 1.1385.

The dollar index =USD, which measures the currency against those two peers and four other counterparts, was flat at 99.159.

Traders will have an eye on the ADP employment report later in the day, in the run-up to crucial US monthly payrolls figures on Friday.

“Job openings were much stronger than expected,” Commonwealth Bank of Australia analyst Joseph Capurso said of the overnight JOLTS data, which is closely watched by the Federal Reserve.

“The low estimate for ADP means the USD and US bond yields have a small hurdle to climb for a positive surprise tonight.”

Elsewhere, the Australian dollar was little changed at USD 0.6460 ahead of the release of GDP figures.

South Korea’s won strengthened about 0.2% to 1,375.25 per dollar after the victory of liberal candidate Lee Jae-myung in the country’s presidential election.

(Reporting by Kevin Buckland; Editing by Jamie Freed)

Gold falls from near four-week peak on firm dollar, traders eye Trump-Xi call

Gold fell nearly 1% on Tuesday after hitting a near four-week high, pressured by a firmer dollar as investors grew cautious ahead of a potential call between US President Donald Trump and Chinese leader Xi Jinping.

Spot gold fell 0.9% to USD 3,352.30 an ounce as of 2:26 p.m. ET (1826 GMT), after hitting its highest since May 8, earlier in the session.

US gold futures settled 0.6% lower at USD 3,377.10.

The dollar rose 0.5% from an over-a-month low hit earlier in the session, making gold costlier for foreign buyers.

“We are moving into this period that is well known to be the summer doldrums, so there’s an expectation that the gold market could fall into a bit of a lull or a sideways consolidation,” said David Meger, director of metals trading at High Ridge Futures.

Markets are on edge ahead of a likely Trump-Xi call this week, after Trump accused China of violating an agreement to roll back tariffs. The talks come as trade tensions between the world’s two largest economies continue to simmer.

Separately, the European Commission said it would push for lower US tariffs even as Trump proposed doubling duties on steel and aluminum, while Washington urged trade partners to submit revised offers by Wednesday to speed up talks.

Investors are also eyeing Friday’s US nonfarm payrolls data and a slate of Federal Reserve speakers for clues on rate policy.

US data on Tuesday showed job openings rose in April, but higher layoffs signaled a cooling labor market amid growing tariff concerns.

“I believe the Fed is ready to begin to cut rates again, but more than likely not until September … that is another factor likely to weigh on the dollar and support gold,” Meger added.

Gold, a safe-haven during times of political and economic uncertainty, tends to thrive in a low-interest-rate environment. It is up about 28% this year.

Spot silver fell 0.8% to USD 34.51 an ounce, but lingered near a seven-month peak hit in the previous session.

Continued copper strength, driven by firm Chinese demand, tight global supplies, and green energy trends, could support silver’s rally, Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

Platinum rose 0.9% to USD 1,073.14 an ounce, while palladium climbed 2.1% at USD 1,009.83.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Andrea Ricci, Vijay Kishore, and Mohammed Safi Shamsi)

Dollar holds near six-week low as trade war wears on US economy

TOKYO – The dollar fell to a six-week low on Tuesday on signs of fragility in the US economy because of damage from the trade war President Donald Trump’s administration is waging.

While global equity markets have broadly recovered in the wake of the on-again, off-again saga of Trump’s tariff threats, the greenback remains firmly on its back. Factory and jobs data in the United States in the coming days may give further signs of the toll that trade uncertainty is wreaking on the world’s biggest economy.

US duties on imported steel and aluminum are set to double to 50% starting on Wednesday, the same day the Trump administration expects countries to submit their best offers in trade negotiations.

“What this whole dynamic is basically saying is trade tensions are not really improving in that regard, and we’ve seen the dollar getting hammered widely,” said Rodrigo Catril, senior FX strategist at National Australia Bank. “Interestingly, the Aussie and the kiwi have been the good performers this time around.”

The dollar index, which measures the US currency against six major peers, was little changed after touching 98.58, the lowest since late April, when it fell to a three-year trough. The greenback was at 142.71 yen, near a one-week low.

The euro was barely changed at USD 1.1446 after briefly touching a six-week high of USD 1.1454. Later in the week, the focus will be on the European Central Bank’s interest rate decision and subsequent outlook.

New Zealand’s kiwi dollar added 0.1% to USD 0.6045, a new high for the year. The Australian dollar was little changed at USD 0.64951.

The dollar index sank 0.8% on Monday after data showed US manufacturing contracted for a third month in May and tariff snarls meant suppliers took longer to deliver goods. Attention now turns to US factory order numbers on Tuesday, along with jobs figures due later in the week.

The dollar got some respite last week, rising 0.3% after trade talks with the European Union got back on track and a US trade court blocked the bulk of Trump’s tariffs.

An appeals court reinstated the duties a day later, and Trump’s administration said it had other avenues to implement them if it loses in court.

Fiscal worries have also given rise to a broad “sell America” theme that has seen dollar assets from stocks to Treasury bonds dropping in recent months.

Those concerns come into sharp focus this week as the Senate starts considering the administration’s tax cut and spending bill, estimated to add USD 3.8 trillion to the federal government’s USD 36.2 trillion in debt over the next decade.

(Reporting by Rocky Swift; Editing by Christian Schmollinger)

Oil rises on Iran, Russia and Canada supply concerns

Oil prices rose in early Asia trade on Tuesday on concerns about supply, with Iran set to reject a US nuclear deal proposal that would be key to easing sanctions on the major oil producer, and with production in Canada hit by wildfires.

Brent crude futures gained 55 cents, or 0.85%, to USD 65.18 a barrel by 0000 GMT. US West Texas Intermediate crude was up 59 cents, or 0.94%, to USD 63.11 a barrel, after rising around 1% earlier in the session.

Both contracts gained nearly 3% in the previous session after OPEC+ agreed to keep output increases in July at 411,000 barrels per day, which was less than some in the market had feared and the same hike as in the previous two months.

Geopolitical tensions supported prices on Tuesday. Iran was poised to reject a US proposal to end a decades-old nuclear dispute, an Iranian diplomat said on Monday, saying it fails to address Tehran’s interests or soften Washington’s stance on uranium enrichment.

If nuclear talks between the US and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices.

The ongoing conflict between Russia and Ukraine continued to stoke supply concerns and geopolitical risk premiums.

Adding to supply worries, a wildfire in the province of Alberta in Canada has prompted a temporary shutdown of some oil and gas production, which could reduce supply.

According to Reuters calculations, wildfires in Canada have affected more than 344,000 bpd of oil sands production, or about 7% of the country’s overall crude oil output.

The big jump in oil prices on Monday mostly reflected relief that the Organization of the Petroleum Exporting Countries and allies, including Russia, did not go ahead with a larger production hike than in the previous two months.

“With the worst fears not panning out, investors unwound their bearish positions they had built prior to the weekend’s meeting,” Daniel Hynes, senior commodity strategist at ANZ, said in a note.

(Reporting by Anjana Anil in Bengaluru; Editing by Sonali Paul)

US yields rise after latest tariff threat, data

NEW YORK – Longer-dated Treasury yields climbed on Monday after the latest tariff announcement from US President Donald Trump, while yields briefly pared gains after data on the manufacturing sector again showed contraction.

Trump said late on Friday he planned to increase tariffs on imported steel and aluminum to 50% from 25%, ratcheting up pressure on global steel producers and extending his trade war.

“In this environment, with the Federal Reserve on pause at this point, the economic data holding in there, the more recent big news items have been related to the deficit and then with trade, and both of those combined pushes yields higher,” said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

“If it starts to point in the other direction for the economy going downwards, then the long-end just based on where yields are today, I could see investors starting to move back in there as the economy becomes an area of concern again.”

The yield on the benchmark US 10-year Treasury note rose 4.2 basis points to 4.46% after earlier rising to 4.47% on the session.

Yields retreated slightly after the Institute for Supply Management (ISM) said its manufacturing PMI edged down to a six-month low of 48.5 last month from 48.7 in April. A reading below 50 signals contraction and it was the third straight month below that threshold.

“The tariff pause wasn’t a pause that refreshes, it’s probably because it’s not much of a pause, tariffs are still up,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

“The pause was on the most punitive tariffs. Firms stocked up on inventory and are now destocking. The Fed may be in wait-and-see mode, but firms are just waiting, not knowing what they’ll see.”

Markets have been volatile since Trump announced a slew of tariffs on countries around the globe on April 2, only to then pause some and declare new ones.

Federal Reserve Governor Christopher Waller said on Monday, while speaking in Seoul, South Korea, that interest rate cuts remain possible later this year, even with the Trump administration’s tariffs likely to push up price pressures temporarily.

The yield on the 30-year bond rose 6.1 basis points to 4.993% after climbing to a high of 5.003%.

Economic survey data has shown expectations for higher inflation have grown as the tariffs are announced, while many Fed officials have indicated a patient approach to determine the effect the levies may be having on prices.

Federal Reserve Bank of Dallas President Lorie Logan said on Monday that inflation is still above the central bank’s target and the Fed is well-positioned to wait and be patient, with the key risk being if short-term inflation expectations become entrenched.

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, was at a positive 51.7 basis points.

Markets are currently anticipating a cut from the Fed of at least 25 basis points likely to come at the central bank’s September meeting.

Chicago Federal Reserve Bank President Austan Goolsbee said the Fed was likely to lower rates after the uncertainty from tariff policies is cleared up.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, rose 2.7 basis points to 3.941%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.393% after closing at a three-week low of 2.378% on May 30.

The 10-year TIPS breakeven rate was last at 2.344%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

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