US treasury yields slip as investors weigh Trump’s tariffs

US treasury yields fell on Monday as investors weighed the new tariffs imposed by President Donald Trump on key trade partners.

The two-year treasury yield was down 1.2 basis points to 4.224% at 6:13 p.m. Makkah time. Meanwhile, the yield on the 10-year treasury fell 8.7 bps to 4.478% and the yield on the 30-year note went down 10 bps to 4.711%.

Investors are still assessing the impact of Trump’s decision to impose 25% tariffs on imports from Canada and Mexico, and 10% on Chinese goods, which could trigger a trade war that will negatively impact economic growth.

On the economic data front, the Institute for Supply Management reported on Monday that its manufacturing PMI rose to 50.9 in January, the highest level since September 2022, from 49.2 in December.

The data points to momentum in manufacturing activity despite high borrowing costs, which could prompt the Fed to hold interest rates higher for longer. This comes amid anticipation for the monthly jobs report due on Friday, which will give a clearer picture of the health of the U.S. economy.