New York, USA – U.S. Treasury yields experienced an increase on Thursday as investors pondered the condition of the U.S. economy following concerns expressed by Federal Reserve Chairman Jerome Powell regarding the impacts of the White House’s tariffs on inflation and economic growth. The benchmark 10-year Treasury yield raised by approximately 4 basis points to 4.319% at 3:55 a.m. ET, while the 2-year Treasury yield also saw an increase of over 2 basis points to 3.815%. Investors are closely examining Powell’s statements from Wednesday, where he highlighted the potential dilemma of the Fed needing to manage inflation while also supporting economic growth. President Donald Trump’s tariffs have introduced uncertainties into the U.S. economic growth outlook, as Powell forecasts a potential increase in inflation and a decline in growth for the year.
Powell raised the possibility of a challenging situation where the Fed’s dual-mandate goals could be at odds, emphasizing the importance of evaluating how far the economy is from each goal and the differing time horizons for closing those gaps. Despite the concerning economic landscape, analysts from Deutsche Bank noted that Powell does not seem eager to promptly address economic challenges. They highlighted his stance that the Fed is not in a rush to respond to recent weaker surveys and that market intervention may not be necessary at this time, as markets continue to operate orderly despite facing uncertainties.
Following positive retail sales data, investors are now awaiting the release of the latest housing data and the weekly initial jobless claims report on Thursday. The ongoing trade tensions, along with Powell’s cautious approach and market observations, contribute to the current atmosphere of uncertainty among investors and economic analysts. The potential impact of tariffs on inflation and economic growth remains a key focal point for market participants as they navigate through evolving market conditions. Powell’s remarks and the upcoming economic data releases will likely provide further insights into the future direction of the U.S. economy.