Treasury yields tumbled on Thursday to nearly a 6-month low, a day after President Trump announced sweeping tariffs that shook stock markets around the world.

The yield on the 10-year Treasury, which affects borrowing costs on all sorts of loans, tumbled Thursday morning to as low as 4.00%, down from 4.20% late yesterday and at its lowest level since mid-October. The bond rally —when bond prices go up, yields fall—came amid a global stock sell-off that put the S&P 500 down more than 4% in late-morning trading.

Trump on Wednesday afternoon announced a 10% flat rate tariff on nearly all U.S. imports, as well as steeper country-level rates aimed at America’s largest trading partners, including China, the European Union, and Japan. The tariffs, Trump says, are meant to raise federal revenue and revive American manufacturing.

Economists warn the levies could have unintended consequences, including higher prices for businesses and consumers, lower domestic investment, and softer consumer spending, all of which would slow the economy.

Trump campaigned on lower interest rates, and since returning to the White House has repeatedly called on the Federal Reserve to cut rates. The 10-year Treasury yield has declined since Trump’s inauguration, but not for the reason he might like.

Trump’s tariffs and government cost-cutting initiative have raised the risk of the U.S. entering a recession, an outcome that could force the Federal Reserve to intervene by lowering its federal funds rate . His policies have also rattled financial markets, sending investors into traditional safe-haven assets like Treasurys and gold, which has notched a series of record highs amid this year’s market turmoil.

Lower Treasury yields tend to translate into lower consumer rates on products like mortgages and car loans , which have been hovering at multi-decade highs ever since the Federal Reserve began raising rates in March 2022 to tame surging inflation.

However, Trump’s tariffs threaten to slow economic growth and stoke inflation, raising concerns that the U.S. is on a collision course with 1970s-style stagflation , a scenario in which the Fed may not have much leeway to cut rates and stimulate the economy.

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