The yield on the US 10-year Treasury note held above 4.43% on Tuesday, hovering at a one-month high as investors awaited the June consumer price index, a key data point that could reveal the inflationary impact of the Trump administration’s tariff policies. Federal Reserve Chair Jerome Powell recently signalled that inflation is likely to rise this summer due to ongoing tariff pressures—reinforcing expectations that the Fed may hold off on interest rate cuts until later this year. However, concerns over the central bank’s independence persist, with President Donald Trump continuing his criticism of Powell and insisting that interest rates should be at 1% or lower. On the trade front, Trump indicated a willingness to resume tariff negotiations with the European Union and other key partners. Still, geopolitical tensions escalated after he threatened to impose secondary tariffs of 100% on Russia unless a peace agreement with Ukraine is reached within 50 days.
The yield on the Indian 10-year G-Sec hovered around 6.3%, near a one-month low, as investors weighed soft domestic inflation and mounting global trade uncertainty. Consumer inflation slowed for the eighth straight month to a six-year low of 2.1% in June, reinforcing expectations of further easing by the Reserve Bank of India. The RBI’s surprise 50-basis-point rate cut in June to 5.50% was seen as a sign of confidence in the disinflation trend and a move to shield growth amid escalating global risks. While the central bank’s August move is unclear, at least one more rate cut is expected by year-end if inflation remains controlled. Meanwhile, US President Donald Trump intensified trade tensions by threatening to impose 30% tariffs on imports from Mexico and the EU beginning August 1. However, Bloomberg reported that the US is working toward a temporary trade agreement with India that could lower proposed tariffs to under 20%, with a formal announcement expected soon.
