TREASURIES-Treasury futures dip as US tariffs raise inflation risks

Reuters07:37
TREASURIES-Treasury futures dip as US tariffs raise inflation risks

SINGAPORE, Feb 3 (Reuters) - Treasury futures slipped and traders lowered expectations for U.S. interest rate cuts on Monday, figuring tariffs on the country's top trading partners risked stoking inflation.

Ten-year U.S. Treasury futures TNc1 were down about 3 ticks in early trade, giving an implied yield of 4.57% - not far from where the cash market closed in New York on Friday.

Analysts said the lack of a bounce, despite selling in equities and other risk-sensitive assets, showed investors were focused initially on how higher prices may stall rate cuts.

Fed funds futures 0#FF: trimmed about 6 basis points from rate cut expectations this year.

"Maybe markets are treating this more initially as more of an inflation impact than a growth impact," said ANZ rates strategist Jack Chambers, with traders perhaps counting on tariffs being short-lived.

(Reporting by Tom Westbrook; Editing by Sonali Paul)

((tom.westbrook@tr.com; +65 6973 8284;))

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