NEW YORK- US Treasury yields rose on Friday on concerns over the potentially inflationary impact of tariffs as trade wars between the US and its trading partners escalate, while a stock market recovery reduced safe-haven demand for US government debt.
Market participants are grappling with uncertainty over how many of President Donald Trump’s tariffs are going to be implemented as well as whether they will slow economic growth and lead to a renewed surge in prices.
“What you’ve had over the past week or two is a repricing of what’s called the Trump put lower for equities, while at the same time, understanding that tariffs are probably here to stay in some form and aren’t just a negotiating tactic,” said Zachary Griffiths, senior strategist at CreditSights.
Trump said on Thursday he was not going to change his mind on imposing sweeping reciprocal tariffs on all trading partners on April 2.
A report on Friday found that US consumer sentiment plunged to a nearly 2-1/2-year low in March and inflation expectations soared amid worries about tariffs.
Data this week has shown improving inflation, though some underlying components in the release of the consumer price and producer price reports for February were higher than expected.
