Investors are sending warning signs to economists and policymakers about an impending economic slowdown. The yield on the two-year Treasury note has fallen to its lowest level since October, sparking concerns about growth.
The decline in bond yields is linked to a flight to safety in the market, with investors selling stocks and buying bonds amid increasing volatility. This trend is fueled by growing expectations that the Federal Reserve will cut interest rates to stimulate economic activity in the face of recession fears.
US President Donald Trump’s changing stance on tariffs has contributed to this anxiety, as markets are now pricing in a 74% chance of another three rate cuts this year. The Atlanta Fed’s latest GDPNow estimate projects a 2.4% contraction in the US economy this quarter.
Analysts from Deutsche Bank and Convera have warned that Trump’s unclear tariff plans have sparked speculation about his administration accepting short-term economic pain for longer-term goals. Betting markets are also seeing a higher chance of recession, with Polymarket predicting a 41% probability that the US will enter a downturn this year.
Source: https://www.businessinsider.com/recession-outlook-2025-bond-yields-trump-inflation-interest-rates-election-2025-3