The 10-year Treasury yield inched lower on Wednesday after stronger-than-expected retail sales data and comments from Federal Reserve Chair Jerome Powell on tariff policy.
The benchmark 10-year's yield rose slipped about 4 basis point to 4.285%. The 2-year Treasury yield declined by about 5 basis point to 3.78%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
March retail sales data showed consumer spending was resilient last month, in spite of weakening sentiment. The advanced estimate of retail sales showed an increase of 1.4% on the month, according to the Commerce Department on Wednesday. That was better than the 1.2% Dow Jones estimate and higher than the 0.2% increase in February. Excluding autos, sales were up 0.5%, better than the 0.3% forecast.
The results came as global trade remained as an overhang for investor sentiment. President Donald Trump will meet with Japanese officials Wednesday to negotiate tariffs, the president announced on Truth Social. The Trump administration had previously levied Japanese goods with a 24% blanket tariff. The Office of the U.S. Trade Representative shows Japan was one of the top five buyers of U.S. goods in 2022.
Powell said Wednesday afternoon that Trump's tariffs were complicating the central bank's role. Powell said that the duties could drive up inflation in the near-term and are "likely to move us further away from our goals."
The bond market sell-off has raised questions about who is unloading U.S. Treasurys, with speculation surrounding China, as the country is America's second-largest foreign creditor after Japan, holding roughly $760 billion in Treasury securities. Other suspects include Japanese life insurers and hedge funds.
Money Report
"I think China is actually weaponizing the Treasury holding already," said Chen Zhao, chief global strategist at Alpine Macro. "They sell U.S. Treasurys and convert the proceeds into Euros or German bunds."
— CNBC's Jeff Cox contributed to this report.
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