Yields decline as markets shift to risk-off. Treasury yields declined today amid a risk-off tone triggered by artificial intelligence anxiety and tariff uncertainty. The 5-year yield closed 6 bps lower at 3.58%, while the 30-year yield closed only 2 bps lower at 4.70%. Meanwhile, equities sold off as the potential impact of AI on profits rattled investors, with the S&P 500 and NASDAQ closing 1.04% and 1.13% lower, respectively. Bitcoin also dropped over 4% today, now trading below the $65,000 price level, while safe-haven gold rallied 2.3% to close above $5,200 per ounce.
Fed’s Waller remains data dependent heading into March FOMC meeting. Fed Governor Christopher Waller said that his decision to vote in favor of a rate cut at the Fed’s next meeting on March 17-18 will depend on upcoming labor data. Waller acknowledged that the recent January jobs report showed that the labor market has stabilized, but noted that “…if the good labor market news of January is revised away or evaporates in February, it would support my position at the FOMC’s last meeting, that a 25-basis-point reduction in the policy rate was appropriate, and that such a cut should be made at the March meeting.” Waller noted that as long as underlying inflation continues to trend towards the Fed’s 2% target, his policy view will be based on the labor market outlook.
EU hits pause on US trade deal after Supreme Court ruling. Legislators in the European Union have halted work on ratifying the previously agreed trade deal with the US. The move was driven by uncertainty over the ramifications of the US Supreme Court’s decision to strike down President Trump’s “Liberation Day” tariffs. Adding to EU concern are President Trump’s pledges to impose new duties. Following the ruling on Friday, the President declared a new 10% global tariff, which he has since increased to 15%. Bernd Lange, chair of the European Parliament trade committee, said the EU would like “clarity from the US that they are respecting the deal because that’s a crucial element.”
