New York Fed President John Williams underscored the need to keep inflation expectations firmly anchored, emphasizing that strong policy responses are necessary when inflation veers off target to prevent it from becoming entrenched. Meanwhile, Minneapolis Fed President Neel Kashkari remarked on Tuesday that the Federal Reserve should hold off on interest rate changes until the inflationary effects of rising tariffs become clearer.

On Tuesday, the 10-year U.S. Treasury yield fell below 4.5% for the third straight session, as investors grew increasingly cautious amid fiscal and trade uncertainty. Market focus has now shifted to the Senate, where debates are set to begin on President Trump’s sweeping tax and spending plan, an initiative the Congressional Budget Office projects could add roughly $3.8 trillion to the national debt over the next decade. At the same time, trade tensions remain elevated after Trump postponed a planned 50% tariff on EU imports from June 1 to July 9.

The U.S. Dollar Index dropped below 99 on Monday, reaching its lowest level in over a month. The decline followed President Donald Trump’s announcement to delay the implementation of the proposed 50% tariffs on the European Union until July 9, which provided support for the euro.