By Vivien Lou Chen and Jamie Chisholm
Yields on U.S. government debt finished mostly lower on Tuesday on President Donald Trump’s decision to not immediately announce a swath of tariffs on U.S. imports.
What happened
— The yield on the 2-year Treasury BX:TMUBMUSD02Y rose less than 1 basis point to close at 4.28%, versus 4.272% on Friday.
— The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 3.7 basis points to 4.573%, from 4.61% on Friday. Tuesday’s closing level was the lowest since Dec. 30, based on 3 p.m. Eastern time data from Dow Jones Market Data.
— The yield on the 30-year Treasury BX:TMUBMUSD30Y dropped 4.3 basis points to 4.802%, from 4.845% on Friday. Tuesday’s closing level was the lowest since Jan. 2.
— The broader financial market was closed on Monday for Martin Luther King Jr. Day.
What drove markets
With no U.S. economic data released on Tuesday and Federal Reserve officials silent ahead of their Jan. 28-29 meeting, bond investors were focused on what did not happen in Washington.
Contrary to his previous pledges, President Donald Trump did not slap a range of tariffs on goods coming into the U.S. immediately after his inauguration on Monday. Trump did allude to the possibility of imposing tariffs on Mexico and Canada as soon as Feb. 1, but traders didn’t appear to be treating his comments as concrete policy for now.
Import tariffs are considered by many investors to be inflationary, and the possibility that they might have been imposed as soon as Trump’s first day in office contributed to the recent climb in long-dated yields since his election victory in November.
The lack of immediate tariffs “raised hopes that Trump would initially try and reach a deal with U.S. trade partners, with tariffs as a potential point of leverage, rather than something to be used immediately,” said Jim Reid, a strategist at Deutsche Bank.
At bond giant Pimco, Libby Cantrill, head of public policy, said: “Tariffs may not have been increased on Monday, but we would urge folks not to read too much into what is more likely a delay, rather than an absence of future tariff actions.”
-Vivien Lou Chen -Jamie Chisholm
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
01-21-25 1545ET
Copyright (c) 2025 Dow Jones & Company, Inc.