The 10-year Treasury yield is set to fall, which has already sparked trade tensions among investors. A fall in Treasury yields means a decline in interest rates in the market. This means that an economic recession is coming. In recent times, weak economic data and the Federal Reserve’s policy decisions have led to a significant decline in interest rates in the market.
Why is yield decreasing :
1) First, there is a fear of an economic recession, which is causing interest rates in the market to fall. Usually, when the economy weakens, investors express interest in safe investments. Such as US Treasury bonds. As a result, the demand for bonds increases and yields fall.
2) On the other hand, the Federal Reserve has indicated that it will cut interest rates. According to this Fed policy, Treasury yields are likely to decline.
3) When inflation levels decrease, the demand for bonds increases because the level of return is higher.
4) It is natural for bond prices to rise as yields fall. The 10-year Treasury yield will also affect interest rates on other debt, which will lower the overall cost of borrowing. However, it also provides a safe haven for investors, especially during times of stock market volatility.
Yield on 10-year Treasury :
On Wednesday, the benchmark fell more than 1 basis point to 4.279%. On Tuesday, it had crossed 4.3% at its intraday high. The 30-year Treasury bond price fell more than 2 basis points to 4.898%, while the 2-year Treasury note yield was 3.597%.
On Saturday, US President Donald Trump threatened to impose tariffs on eight European allies. From what is understood, they will start from 10% on February 1 and increase to 25% by June 1. This is partly because Washington is trying to force a deal to “buy” Greenland, an independent territory of the Kingdom of Denmark. But on the other hand, European leaders have said they will retaliate against Trump. They consider the tariff threat completely unacceptable, but the United States is taking steps to take other measures.
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On Saturday, US President Donald Trump threatened to impose tariffs on eight European allies, starting at 10% on February 1 and rising to 25% by June 1, as Washington pushes to reach a deal to “buy” Greenland, an independent territory of the Danish kingdom. European leaders have hit back at Trump, calling the tariff threat “unacceptable” and considering countermeasures against the US.
Danish pension operator Academic Pension said on Tuesday that investors are pulling out of US Treasuries due to weak US government finances and currently have $100 million in the US Treasury. However, US Treasury Secretary Scott Besant dismissed the issue as completely irrelevant. According to the US Treasury Secretary, like Denmark, US Treasury bond investments are irrelevant.
