On Tuesday, the yield on the 10-year U.S. Treasury note fell over 2 basis points to 4.481%, while the 2-year Treasury note yield decreased by over 4 basis points to 4.190%. The 30-year Treasury bond yield also saw a slight decline, dropping about 1 basis point to 4.937%.
These movements occurred despite fears of rising interest rates, which have unsettled investors and led to a sell-off in tech stocks worldwide. Notably, the 2-year yield had reached its highest level since February 2025 before slightly retreating. In the U.K., bond yields also fell, even after Prime Minister Keir Starmer announced his resignation, which could lead to a change in leadership.
The bond markets appear to have already accounted for the potential shift, particularly with Andy Burnham, a left-leaning candidate, being the frontrunner. A significant focus for investors will be the upcoming release of the personal consumption expenditures price index on Thursday, which is the Federal Reserve's preferred measure of inflation.
Economists expect the core PCE, excluding food and energy prices, to show an increase from April, which could influence future Fed policy