Interest rates have been on a rollercoaster just three months into the year, with the 10-year Treasury yield swinging from a 13-month high to a multi-month low before rebounding again.
Why It Matters: The rapid moves in bond yields reflect shifting investor sentiment, driven by economic uncertainty, slowing equity markets, and unexpected policy decisions.
Volatility: On January 13, the 10-year yield hit 4.80%, its highest level in over a year, as inflation levels stopped their reverse and began to rise. But that narrative flipped in recent weeks as weaker consumer data sparked concerns about a slowdown, making bonds more attractive.
Tariffs: President Donald Trump’s tariff surprise—his decision to move forward with delayed Mexico and Canada tariffs sent the 10-year yield tumbling to 4.12%, its lowest level since October 2024. However, Commerce Secretary Howard Lutnick’s suggestion that Trump might scale back the tariffs helped markets recover, pushing the 10-year yield back up to 4.25% by the close.
Bottom Line: Rates have had a chaotic start to 2025, and with economic and policy risks looming, the volatility may be far from over.
