U.S. Treasury yields were higher on Wednesday as investors considered the impact of President Donald Trump’s tariffs on Canada, Mexico, and China.
At 4:55 a.m. ET, the benchmark 10-year Treasury yield rose more than three basis points to 4.242%. The 2-year Treasury yield rose more than two basis points to 3.982%.
One basis point is equal to 0.01% and yields and prices have an inverted relationship.
Investors are concerned about the potential impact of Trump’s tariffs after 25% duties on imports from Canada and Mexico came into effect on Tuesday. The president also imposed an additional 10% tariff on goods from China.
Canada, Mexico, and China have responded by preparing retaliatory measures against the U.S.
“The thing that we have emphasized over and over again is that Trump introduces uncertainty. We now are at a point where a single tweet or a single release of information can significantly change the interpretation of what markets look like,” Michael Green, chief strategist at Simplify Asset Management told CNBC.
Green said a global trade war ignited by the retaliatory tariffs, could negatively impact the U.S. economy.
“You almost end up in a forced savings regime, which in turn negatively affects employment, negatively affects wealth, and that’s what markets are trying to price right now. We genuinely don’t actually know,” he added.
Investors are also awaiting some economic releases on Wednesday including the ADP employment change report and the purchasing managers’ index for the prior month, which could offer insights into the health of the U.S. economy.
