Bonds Show Fear Tariffs Will Deliver Inflation, Growth Shocks
- Short-end yields rise on inflation risk from US trade tariffs
- Long-end rates fall on concern tariffs would hurt the economy
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The US bond market is flashing a warning to President Donald Trump that unleashing tariffs on top trading partners risks fueling inflation and slowing the nation’s economic growth.
His tariff decision — though subsequently delayed Monday in Mexico’s case — drove short-dated Treasury yields higher by as much as eight basis points to 4.28% on anticipation that it will keep interest rates elevated by pushing up consumer prices. But longer-term yields moved in the opposite direction on worries that the economy will stall, narrowing the gap between those on 2- and 30-year bonds by the most since early December.