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Treasury Secretary Calls for Fed Rate Cuts as Bond Yields Signal Market Expectations

Scott Bessent points to the two-year Treasury yield falling below the Fed’s policy rate as evidence for imminent monetary easing, while the 10-year yield remains volatile due to trade policy uncertainty.

U.S. Treasury Secretary Scott Bessent attends a cabinet meeting held by U.S. President Donald Trump at the White House in Washington, D.C., U.S., April 30, 2025. REUTERS/Evelyn Hockstein/File photo
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Overview

  • Treasury Secretary Scott Bessent highlighted the inversion of the two-year Treasury yield, now at 3.75%, below the Federal Reserve’s policy rate range of 4.25%–4.5%, as a clear market signal for interest-rate cuts.
  • Market participants anticipate the first Fed rate cut in June, with no action expected at the May 6–7 Federal Reserve meeting.
  • The 10-year Treasury yield, a key economic indicator, currently stands at 4.15%, reflecting significant declines since January but ongoing volatility linked to shifting U.S. trade policies.
  • President Trump has escalated public pressure on Federal Reserve Chair Jerome Powell, asserting his own expertise on interest rates while denying plans to remove Powell, fueling market uncertainty.
  • Recent tariff announcements and pauses by the administration have driven import surges, contributing to fluctuations in Treasury yields and complicating economic forecasting.