What the Dip in Treasury Yields Says About Trump’s Tariff Plans

On Monday, yields on 10-year treasuries slipped to their lowest in nearly a month, suggesting investors’ concerns about tariffs and inflation may been allayed by one of Donald Trump’s recent cabinet picks.

Yields plunged Monday, dipping to 4.27% by late afternoon from 4.41% at the end of trading Friday, hitting the lowest since Oct. 29. This is a turn for the 10-year, which surged to its highest levels since July in the wake of Trump’s win in the presidential election.

Investor concerns about inflation heavily influence Treasury yields, so some economists suggested the dip may reflect optimism among traders that Trump’s pick of Scott Bessent for Treasury Secretary could temper some of the president-elect’s plans for tariffs.

Economists widely believe Trump’s campaign-trail proposals of high tariffs on foreign products—including a 60% tariff on Chinese goods and a tariff as high as 20% on goods from every other country—would push up prices for consumer products and stoke inflation.

Bessent has voiced support for Trump’s tariff proposals but has also said the threat of tariffs could be used as a negotiating tool without actually implementing them.

“We do not believe he is a trade hardliner,” Matthew Luzzetti, chief economist at Deutsche Bank, together with other economists, wrote in a research note to clients. “Bessent’s presence should, therefore, act as a counterbalance to Trump’s most extreme impulses on tariffs, as well as other voices supporting these policies.”