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Treasury yields rise after White House says tariffs will kick off this weekend

Traders work at the New York Stock Exchange on Dec. 17, 2024.
NYSE

Traders work at the New York Stock Exchange on Dec. 17, 2024.

U.S. Treasury yields ticked higher Friday afternoon after the White House said that tariffs on Mexico, Canada and China will begin this weekend. Investors also parsed the latest inflation reading.

The 10-year Treasury yield was up 5 basis points at 4.563%, and the 2-year Treasury yield was 2 basis points higher at 4.218%.

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One basis point is equal to 0.01%, and yields and prices move in opposite directions.

Treasury yields took a leg higher after White House press secretary Karoline Leavitt said on Friday afternoon that President Donald Trump's tariffs will be available for inspection at some point on Saturday. They include a 25% levy on Canada and Mexico, as well as a 10% duty on China.

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Elsewhere, the personal consumption expenditures price index — the U.S. Federal Reserve's preferred inflation gauge — increased 0.3% in December from a month earlier and 2.6% on an annual basis. Both readings were in line with forecasts from economists polled by Dow Jones. However, the annual figure marked an acceleration from the prior month's 2.4% annual increase, raising concern that the central bank will remain vigilant in pushing inflation down to its 2% target.

Excluding food and energy, so-called core PCE advanced 0.2% month over month and 2.8% year over year.

On Thursday, yields moved lower as the latest gross domestic product report came in weaker than expected, showing slower economic growth in the U.S. The fourth-quarter GDP growth rate was 2.3%, while economists surveyed by Dow Jones were forecasting an increase of 2.5%.

The Fed held benchmark borrowing rates steady at 4.25% to 4.50% on Wednesday at its first meeting of the year, pointing to continued inflation risks despite pressure from President Donald Trump to cut rates. This week's activity left traders questioning if the Fed will enact the two rate cuts in 2025 it had previously penciled in.

Fed Chair Jerome Powell said at his press conference that the central bank will need to see "real progress on inflation or some weakness in the labor market before we consider making adjustments" to interest rates.

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