Global markets have been on edge as shifting trade headlines and political signals continue to sway investor sentiment. With talk of potential tariff changes and reassurances from the White House about the Federal Reserve’s independence, traders are navigating a landscape where policy developments can quickly shift the outlook for bonds and risk assets alike.
The US 10-year Treasury note opened Thursday’s session near 110.66, briefly rallying to 111.55 following early speculation that the Trump administration might relax tariffs on Chinese imports.
This development temporarily fuelled risk appetite, as lower trade barriers often reduce inflation concerns and drive demand for US government bonds.
However, the rally lost steam after Treasury Secretary Scott Bessent clarified that no official discussions with China had commenced and no decisions had been made regarding tariff adjustments.
This dampened initial optimism, leading to a pullback, with the note closing near 110.83.
Investor sentiment also responded to President Trump’s reassurance that Federal Reserve Chair Jerome Powell would not be dismissed.
This move was interpreted as a signal of continued central bank independence, easing concerns that monetary policy might become politicised.
The confirmation helped restore some confidence among bondholders that interest rate decisions would remain grounded in economic data.
Following a quiet open, the USNote10Y broke higher, reaching an intraday peak of 111.55.
This move was underpinned by steep inclines in the 5- and 10-period moving averages, suggesting strong bullish momentum.
However, the rally proved short-lived. The price quickly reversed course, dropping below the 30-period moving average to a low of 110.64.
At present, the note is showing signs of modest recovery. The MACD indicator points to fading bearish momentum, with a potential bullish crossover forming above the signal line.
Price action is consolidating just above 110.80, testing short-term resistance.
A sustained push above 111.00 could trigger further upside, while failure to reclaim key averages might keep the note in a sideways pattern beneath 110.90.
With tariff negotiations still uncertain and key US inflation figures due soon, Treasury yields are expected to remain highly sensitive to geopolitical headlines and macroeconomic updates.
Market participants will be monitoring closely for tangible developments in US-China trade relations, while Friday’s PCE inflation report could provide additional insight into the Federal Reserve’s rate outlook.
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