US Treasury yields record lows as investors await key home-price data

US Treasury yields dropped on Tuesday as investors expressed concern over recent data signaling a stagnating economy. Ten-year treasury yields ticked lower by over 5 basis points, while two-year yields slipped by over 4 basis points. 

The yields declined on Tuesday as investors continued to digest Trump’s administration’s policy uncertainty. The 10-year treasury yield dropped to 4.341%, while the 2-year treasury yield dropped to 4.123%. 

Treasury bond yields waver as Trump’s policy shifts fuel uncertainty

Investors look forward to the S&P CoreLogic Case-Shiller National Home Price Index. The index shows changes in U.S single-family home prices and will feature the three months through December.

⚠️BREAKING:

*U.S. 10-YEAR TREASURY YIELD FALLS TO 4.337%, LOWEST SINCE MID-DECEMBER

🇺🇸🇺🇸 pic.twitter.com/FKxfBG2kJt

— Investing.com (@Investingcom) February 25, 2025

Investors were also concerned over Washington’s policy uncertainty. Last month, US President Donald Trump announced he would impose trade tariffs against Mexico and Canada. The president revealed on Monday that the tariffs will begin their implementation next week after a month-long implementation delay. 

Investors also expressed their worry over Trump’s administration’s federal job cut program damaging household confidence. Uncertainty about how the administration’s policies will affect global growth and political alliances has reportedly led to switching to alternative assets such as gold. According to Coinmarketcap Bitcoin dropped to $87,239, its lowest point since mid-November. The plummet resulted from investors stepping back from a popular Trump trade. 

Michael Brown, senior research strategist at Pepperstone said that the president may push for government cost-cutting over economic growth as part of the DOGE government efficiency push. He suggested the Trump administration may push ahead with the tariffs to balance perceived trade unfairness rather than using them as a negotiation tactic. He added the measures could hurt the markets and the economy. 

Rajeev De Mello, a portfolio manager at Gama Asset Management commented that if the US pulled back from global leadership too quickly multinational corporations and global investors would suffer risks. He added that they have benefited from a stable international order for a long time. 

Analysts reveal the Fed is unlikely to cut interest rates in 2025

Friday’s release of the Personal Consumption Expenditures(PCE) index will give Federal Reserve officials more information about January’s inflation path. The data will also inform the Fed on its rate cuts decisions. 

A January Consumer Price Index revealed that inflation rose by 0.5% putting the annual inflation rate at 3%. Josh Jamner, an investment strategy analyst reported that the Fed was unlikely to cut interest rates further after the CPI report. 

In December, the Federal Reserve cut interest rates by 25 basis points to 4.25% -4.5%. The Federal Open Market Committee (FOMC) commented that economic activity had continued to expand at a solid pace. It revealed that it would consider the extent and timing of any additional adjustments to the target range. 

Fed Chair Jerome Powell noted that the Fed evaluated Trump’s proposals but did not incorporate them in the decision to cut rates. Powell emphasized that the Fed would better understand the policies once they were implemented. 

He revealed the Fed would be cautious before further rate cuts. The chair added that it would be appropriate to move cautiously and look for progress on inflation. 

The Federal Reserve announced in a January meeting that it would maintain interest rates at 4.25% to 4.50%. The policymakers commented that inflation rose in January after the December rate cuts. 

Powell said in his press conference the central bank was not in a hurry to revise its rate cuts since the economy remained strong. He added that the Federal Reserve did not know which countries would be affected and for how long the effects would last. 

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