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TREASURIES-Long-term yields rise to highest levels in over a month after auto tariffs
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TREASURIES-Long-term yields rise to highest levels in over a month after auto tariffs
Mar 27, 2025 8:05 AM

NEW YORK, March 27 (Reuters) - U.S. Treasury long-term

yields rose to their highest levels in over a month on Thursday

as investors weighed the inflationary impact of President Donald

Trump's latest tariff moves alongside fresh data showing

continued economic resilience.

Trump unveiled late on Wednesday his plan to implement 25%

tariffs on imported cars and light trucks effective next week,

while the duties on auto parts are expected to begin from May 3.

Investors are also bracing for a wave of reciprocal tariffs he

plans to unveil next week, though the U.S. president has hinted

there may be room for flexibility in the final policy.

Meanwhile, in a sign the labor market is holding up, the number

of Americans filing new applications for unemployment benefits

slipped last week, while the jobless rate appeared to have held

steady in March, Labor Department data showed on Thursday.

That data followed other strong readings earlier this week,

including the services sector in S&P's PMI index for March and

the durable goods orders report for February, which were both

stronger than anticipated.

"Yields are starting to feel a bit of a trend here as U.S.

economic data is coming in better than expectations," said

Matthew Miskin, co-chief investment strategist at John Hancock

Investment Management. "Maybe there is a bit of an inflation

input priced in, but growth isn't as bad as we thought."

Treasury yields, which move inversely to prices, declined

marginally after the release of fourth-quarter gross domestic

product growth data.

While the headline figure was revised to 2.4%, higher than

the consensus estimate of 2.3% in a Reuters poll, the data also

showed consumer spending growth in the last three months of 2024

was revised lower by two-tenths of a percentage point to 4%. An

analyst at BMO Capital Markets said in a note that the specifics

within the fourth-quarter economic growth data were likely to

tilt first-quarter GDP estimates lower.

Benchmark 10-year yields were last at about

4.36%, about three basis points higher than on Wednesday. They

earlier hit an intra-day high of 4.4% - the highest level since

February 24. Longer-dated 30-year yields touched a

high of 4.755%, the highest level since February 20.

Two-year yields, which more closely reflect

market expectations for changes in monetary policy, were last at

3.99%, about two basis points lower on the day.

That meant the closely watched yield curve that plots the

premium of 10-year yields over two-year yields widened to about

37 basis points, the widest since mid-January.

Later on Thursday, the Treasury will sell $44 billion in

seven-year notes, the last of this week's government debt sales.

A two-year note sale on Tuesday was well-received, while a

five-year note issuance on Wednesday met lukewarm demand.

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