The 10-year Treasury yield fell another 3bps Friday to 4.29%. What mattered to markets was the shift in tone from Fed officials. Governor Christopher Waller opened the door to rate cuts if tariffs hit the labor market, and Cleveland Fed President Beth Hammack said the Fed could act by June if the data warrants. Traders are now pricing in a 25bps cut as early as this summer, with three total cuts expected by year-end.

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With consumers rattled and Powell resisting political pressure, the bond market is increasingly betting that rising unemployment—not inflation—will be the decisive force in determining interest rates.

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