Headline: US Bond Yields Plunge as Trump's Trade War Fears Unnerve Investors
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Amidst escalating trade tensions, investors are flocking to the safety of US government bonds, sending yields tumbling to new lows. The 10-year Treasury bond yield, a benchmark for global borrowing costs, dipped below 4.3% for the first time in over two months.
This flight to safety comes as concerns mount over the potential economic fallout from US President Donald Trump's trade war policies. Weak US consumer confidence and a contraction in the services sector have stoked fears that the American economy may be weakening.
Moreover, Trump's decision to maintain tariffs on Canadian and Mexican imports has further rattled markets. Bond market analysts warn that continued negative economic data could damage the perception of US economic exceptionalism.
The market is also closely eyeing the upcoming annual results of Nvidia, a leading AI chip manufacturer. The "magnificent seven" tech giant has been a major driver of US stock market growth, but its shares have come under pressure amid concerns about the AI bubble and competition from Chinese rivals.
The anticipation of rate cuts by the Federal Reserve is also supporting the bond rally. Investors now expect a reduction in the Fed rate by July, with another drop likely before year-end.
These market shifts reflect concerns about growth and inflation. Kathleen Brooks, research director at XTB, notes that while Nvidia is expected to report strong earnings, the market reaction will hinge on its forward outlook.