U.S. International Trade Court’s Tariff Decision Pushes 30-Year Treasury Yield Over 5%

U.S. Treasury yields are sharply on the rise, with the 30-year yield surpassing 5% and the 10-year yield reaching 4.50%, following a decision by the U.S. Court of International Trade that deemed President Donald Trump’s major tariff actions as unlawful.

The ruling specified that trade regulations are the sole prerogative of Congress, stating that the president overstepped his boundaries by using emergency economic measures meant for narrower situations rather than imposing widespread tariffs. While the decision cancels the overarching 10% tariff and reciprocal duties, it leaves industry-specific tariffs, such as those on steel and automobiles, intact. The government has announced its intention to contest the ruling.

In the last two sessions, the yield on 10-year Treasuries has climbed from 4.40%, demonstrating the bond market’s continued sensitivity to shifts in policy and international events.

Even after the court’s ruling, significant uncertainties in the macroeconomic environment persist. Observations from the Kobeissi Letter highlight that strains between the United States and China remain high. The U.S. has directed its domestic chip manufacturers to cease sales to China, halted exports of essential chip software and jet-engine technologies, and initiated plans to revoke visas for Chinese students as part of a renewed effort to decouple the two economies.

The Dollar Index (DXY), reflecting the value of the U.S. dollar against a collection of foreign currencies, has followed suit, rising from 98 to 100 as investors seek haven in the dollar amid ongoing global uncertainties and escalating yields. Conversely, both bitcoin and gold appear to be in a state of stasis, indicating that markets are preparing for the next significant policy change or international event.