U.S. Treasury yields pared back earlier gains on Tuesday as investors weighed the U.S. economic growth outlook, following a reduction in estimates by the Organization for Economic Co-operation and Development (OECD). Meanwhile, ongoing trade tensions with China and the European Union added to market uncertainty, contributing to the volatility in Treasury yields.
Yield Movement and Market Reactions
The 10-year Treasury yield saw a modest increase of 1 basis point to 4.472%, reversing a drop of more than 4 basis points earlier in the day. Last month, the 10-year yield had risen above 4.50%. The 30-year Treasury yield dipped slightly by less than 1 basis point to 4.992%. The movement in yields and prices are inversely related, with yields increasing as bond prices decrease.
OECD Downgrades U.S. Growth Forecast
In its latest report, the OECD downgraded the U.S. economic growth outlook to just 1.6% for 2025, down from a previous forecast of 2.2%. The organization also revised its growth projections for 2026 to 1.5%. This revision has put downward pressure on the broader economic sentiment, as investors react to the downgraded growth outlook and the broader challenges facing the global economy. The OECD also lowered its global growth forecast, citing tariffs and policy uncertainty as key factors that could weigh heavily on growth prospects worldwide.
Rising Trade Tensions Add to Economic Uncertainty
Trade relations between the U.S. and China are on the brink of deterioration. Beijing responded to U.S. accusations on Monday that it had violated a temporary trade agreement, accusing the U.S. of breaking some of the deal’s terms. These rising tensions have added to global economic concerns, exacerbating uncertainty for investors.
Meanwhile, the European Union expressed strong opposition to U.S. President Donald Trump’s plans to double steel tariffs to 50%, calling it an action that “undermines” negotiations between the two countries. The EU spokesperson indicated that the bloc is prepared to impose countermeasures in response, further escalating the trade conflict between the U.S. and its major trading partners.
U.S. Treasury Yield Summary
- U.S. 10 Year Treasury: 4.468% (+0.006)
- U.S. 1 Month Treasury: 4.285% (-0.003)
- U.S. 1 Year Treasury: 4.141% (+0.005)
- U.S. 2 Year Treasury: 3.963% (+0.018)
- U.S. 30 Year Treasury: 4.988% (-0.007)
- U.S. 3 Month Treasury: 4.351% (+0.002)
- U.S. 6 Month Treasury: 4.303% (UNCH)
