The benchmark U.S. Treasury yield was higher on Tuesday even after data showed slightly cooler than expected inflation for April
The yield was up 2.4 basis points to 4.481%, while the yield added less than 1 basis points to 4.011%.
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WATCH HEREOne basis point is equivalent to 0.01%, and yields and prices have an inverse relationship.
The modest decline after the for April showed a 2.3% rise year over year. That is a tick below the 2.4% increase expected by economists, according to Dow Jones.
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SIGN UP While slowing inflation is seen as positive for the bond market, the April data likely doesn't show the full impact of President Donald Trump's tariffs on consumer prices. Additionally, so-called core inflation — which strips volatile food and energy prices — came in at 2.8%, matching expectations.
That combination could tamp down the expectations for Federal Reserve rate cuts this year.
"I think the wait-and-see posture at this stage is still merited until we're sure that we're getting progress and that the uncertainty about tariffs starts to recede a little bit," Roger Ferguson, former Fed vice chair, said Tuesday on "."
The U.S. and China on Monday reached a trade agreement to reduce tariffs, announcing that they will suspend the majority of duties on each other's goods for 90 days. Under the new agreement trade agreement, "reciprocal" tariffs between both countries will be cut from 125% to 10%.
While Monday's news was relatively positive, it is a testament to the "volatile and chaotic nature" by which policy continues to be made in the United States, said Pepperstone's senior research strategist, Michael Brown, who added that it was "the very thing that has been eroding the credibility of its institutions, and haven value of its assets, in recent weeks."
It is also unclear if U.S. President Donald Trump's 10% universal tariffs and trade policy flip-flops will hurt the U.S. economy and corporate sector in the coming months, said OCBC's managing director of investment strategy, Vasu Menon.
"Aside from his baseline 10% universal tariffs, Trump's reciprocal tariffs first announced on 2 April (but paused about a week later, on 9 April) are very hefty," Menon added.
"A significant slowdown in the US economy seems almost certain but a recession remains an uncertainty, although we do not anticipate a US recession at this juncture," he wrote in a note.
