U.S. Treasury Yields Steady Amid U.S.-UK Trade Deal Announcement; Gold Prices Drop Before U.S.-China Talks

U.S. Treasury yields remained stable on Friday, with the 10-year note at 4.37% and the 2-year yield at 3.86%, following the announcement of a U.S.-UK trade agreement. This deal, the first since President Trump imposed global tariffs, adjusts tariffs and opens new export opportunities. Gold prices fell 0.8% to $3,277.67 per ounce as optimism over trade reduced demand for safe-haven assets. Attention is now on U.S.-China talks in Switzerland, where officials aim to ease tariff tensions, though no formal agreement is expected.

Treasury Yields Steady Amid Trade Developments

U.S. Treasury yields showed minimal movement on Friday, reflecting a cautious but steady investor sentiment. The 10-year Treasury yield edged up slightly to 4.37%, while the 2-year yield declined by over three basis points to 3.86%, according to data from CNBC. The yield curve remained relatively flat, with investors awaiting further clarity on global trade policy and upcoming Federal Reserve commentary.

The Federal Reserve earlier this week held interest rates steady in the 4.25% to 4.5% range, a widely anticipated decision. Fed Chair Jerome Powell emphasized that the central bank remains focused on inflation and employment mandates, despite political pressure from the White House to lower rates. Powell also noted that the administration’s tariff policies could complicate the Fed’s ability to meet its goals.

U.S.-UK Trade Deal Marks First Post-Tariff Agreement

On Thursday, President Trump and British Prime Minister Keir Starmer jointly announced a new trade agreement, marking the first such deal since the U.S. implemented a 10% baseline tariff on most imports in April. The agreement resets U.S. tariffs on UK goods to 10%, down from the 27.5% previously applied to certain categories such as automobiles. In return, the UK will reduce its average tariff on U.S. goods from 5.1% to 1.8%, and eliminate duties on American steel, aluminum, and ethanol.

The White House described the deal as a “historic” step that will create $5 billion in new export opportunities for U.S. producers, particularly in agriculture and manufacturing. The agreement also includes provisions to fast-track American goods through UK customs and establishes a new trading union for steel and aluminum.

“This is now turning out to be, really, a great deal for both countries,” President Trump said during the announcement. Prime Minister Starmer echoed the sentiment, stating the deal would “boost trade between and across our countries” and “create jobs.”

The deal also includes a cap on UK car exports to the U.S., with the first 100,000 vehicles annually subject to the 10% tariff and any additional units facing a 25% rate. The U.S. will also recognize UK efforts to address global steel overcapacity and negotiate alternatives to Section 232 tariffs.

Gold Prices Retreat as Risk Sentiment Improves

Gold prices declined on Friday, with spot gold falling 0.8% to $3,277.67 per ounce and U.S. gold futures down 0.7% to $3,282.80. The drop comes as investor demand for safe-haven assets weakened following the U.S.-UK trade deal and ahead of anticipated U.S.-China trade discussions.

“Progress in trade talks and the U.S.-UK deal is the main reason we’ve got gold off the highs,” said Kyle Rodda, a financial market analyst at Capital.com. The shift in sentiment was also reflected in other precious metals, with spot silver down 0.7% to $32.27 per ounce, platinum up 0.2% to $977.85, and palladium slipping 0.4% to $971.86.

Despite the recent dip, gold has seen strong inflows in recent months. April marked the largest monthly inflow into physically backed gold exchange-traded funds since March 2022, driven largely by Chinese investors amid ongoing trade tensions with the U.S., according to the World Gold Council.

Focus Turns to U.S.-China Trade Talks

Investor attention is now shifting to the upcoming high-level trade talks between the United States and China, scheduled for this weekend in Switzerland. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are set to meet with their Chinese counterparts in an effort to de-escalate the ongoing tariff conflict.

The Trump administration’s imposition of a 145% tariff on Chinese goods has been met with a 125% retaliatory tariff from Beijing, straining bilateral trade and disrupting global supply chains. While no formal agreement is expected from the weekend talks, officials have described the meetings as a critical first step toward easing tensions.

“This is about de-escalation, it’s not about coming to terms on a trade deal. But it’s a good first step,” said Shah Gilani, Chief Investment Strategist at Manward Press. President Trump has indicated that he expects “substantive negotiations” and suggested that the punitive tariffs on Chinese goods could be reduced in the near future.

The outcome of the talks could have significant implications for global markets, particularly as the U.S. seeks to replicate the UK deal model with other trading partners. Investors are also closely monitoring upcoming speeches from Federal Reserve officials for further insights into the central bank’s policy outlook.

References

• Treasury yields hold steady as investors monitor global trade negotiations
• Gold falls as U.S.-UK trade deal weighs on safe-haven appeal; U.S.-China talks in focus
• US-UK trade deal: How are Trump’s global tariff talks shaping up?
• U.S.-U.K. Trade Deal: What We Know So Far
• Fact Sheet: U.S.-UK Reach Historic Trade Deal
• US and China to hold high-level talks in bid to ease tariff tensions