Longer-dated U.S. Treasury yields experienced an increase as investors expressed concerns regarding President Trump's escalating criticism of Federal Reserve Chairman Jerome Powell. These concerns, coupled with existing U.S. tariffs, have the potential to exacerbate market vulnerabilities.
Trump has publicly pressured the Fed to implement interest rate cuts, citing lower energy prices and cautioning against economic deceleration if rates are not promptly reduced. This pressure on the U.S. central bank has heightened concerns about volatile policymaking, unsettling both stock and bond markets. The uncertainty is further compounded by Trump's tariff announcements, which elevate the probability of an economic slowdown or recession.
Economists polled by Reuters estimate a nearly 50% chance of a recession in the next 12 months due to aggressive U.S. tariff policies. This uncertainty surrounding U.S. policymaking has contributed to a rise in the Treasury term premium. On April 21, 2025, benchmark 10-year yields were last at 4.403%, over seven basis points higher on the day.