U.S. Treasury yields climbed on Wednesday as investors assessed the potential economic impact of President Donald Trump’s tariffs on Canada, Mexico, and China.
As of 6:20 a.m. ET, the 10-year Treasury yield rose more than 3 basis points to 4.244%, while the 2-year Treasury yield increased by over 1 basis point to 3.972%. (One basis point equals 0.01%, and yields move inversely to bond prices.)
Investor Concerns Over Tariffs
The rise in yields comes as markets react to the 25% tariffs imposed on Canada and Mexico, which took effect Tuesday, alongside an additional 10% tariff on Chinese goods. In response, all three countries have announced retaliatory trade measures, fueling uncertainty.
Despite concerns, Commerce Secretary Howard Lutnick hinted at a possible compromise with Canada and Mexico. However, in an address to Congress, Trump stated that his administration was prepared for a “little disturbance” due to the tariffs.
Market Volatility & Policy Uncertainty
Analysts at BCA Research warned that markets could experience a 10% to 15% equity decline before the administration reconsiders its stance. They noted that policy uncertainty is already slowing economic activity, affecting business investment and hiring decisions.
Upcoming Economic Reports
Investors are also awaiting key economic data scheduled for release Wednesday, including the ADP employment report and the Purchasing Managers’ Index (PMI) from the previous month. These reports could provide further insight into the state of the U.S. economy as markets navigate the impact of trade policies.