By Harshit, Washington, D.C. | October 21, 2025 7 AM EDT
Treasury Yields Steady Amid Shutdown Optimism
U.S. Treasury yields were largely unchanged on Tuesday as investors continued to monitor the government shutdown and signs of growing optimism that a resolution could come soon. The 10-year Treasury yield fell slightly by less than 1 basis point to 3.98%, while the 2-year Treasury note yield dipped to 3.463%. The 30-year Treasury bond yield moved down to 4.57%.
Yields, which move inversely to bond prices, reflect investor sentiment toward risk, economic growth, and inflation expectations. The minimal movement indicates cautious optimism that a government funding deal may be imminent, while uncertainty over the ongoing shutdown continues to weigh on market dynamics.
Government Shutdown and Political Developments
Investors have been closely following the third week of the federal government shutdown, with White House National Economic Council Director Kevin Hassett suggesting that a resolution is “likely to end sometime this week.” Speaking on CNBC’s Squawk Box, Hassett added that the Trump administration could impose “stronger measures” to compel Democratic lawmakers to cooperate if no agreement is reached.
“Now there’s a shot that this week, things will come together, and very quickly,” Hassett said. “The moderate Democrats will move forward and get us an open government, at which point we could negotiate whatever policies they want to negotiate with regular order.”
The standoff has been driven by differing priorities in the Senate. Republicans have pushed for a short-term resolution to resume funding at current levels, while Democrats demand that any stopgap bill include additional spending on health care protections, notably an extension of Affordable Care Act (ACA) tax credits set to expire at the end of the year.
While the impasse persists, polls indicate that voters are increasingly holding President Donald Trump and Republican lawmakers responsible for the shutdown. Despite this, Democrats have largely resisted concessions, leveraging public support for health care programs in ongoing negotiations.
Impact on Economic Data and Market Focus
The shutdown has caused a temporary blackout in U.S. economic reporting. However, key data will resume this week, including the September Consumer Price Index (CPI) scheduled for release on Friday. Analysts are particularly focused on CPI as a gauge of inflationary pressures ahead of the Federal Reserve’s interest rate decision next week.
With inflation remaining a critical metric for Fed policy, investors are weighing the potential market impact of both persistent price pressures and the temporary disruption caused by the shutdown. A higher-than-expected CPI could reinforce the Fed’s path for continued monetary tightening, while a moderate reading may support market expectations of a pause in rate hikes.
Trade Relations with China Offer Some Relief
Treasury markets have also been influenced by easing concerns over U.S.-China trade tensions. President Trump indicated on Monday that he expects to reach a “fair deal” with Beijing following upcoming discussions. The comments offered relief to investors who had been worried that renewed friction could disrupt global supply chains and exacerbate inflationary pressures.
Current Treasury Market Snapshot
As of Tuesday:
- 10-Year Treasury Yield: 3.965% (-0.023)
- 2-Year Treasury Yield: 3.451% (-0.013)
- 30-Year Treasury Yield: 4.554% (-0.025)
- 1-Month Treasury: 4.014% (-0.034)
- 3-Month Treasury: 3.893% (+0.002)
- 6-Month Treasury: 3.786% (+0.005)
- 1-Year Treasury: 3.566% (+0.003)
The relative stability across maturities reflects a cautious market that is balancing hopes for a swift government reopening with uncertainties about inflation, interest rates, and geopolitical developments.
Looking Ahead
Investors will be watching the government shutdown closely this week, particularly any political moves from both parties that could signal a resolution. Market attention will also focus on Friday’s CPI release, which could influence short- and long-term Treasury yields as well as broader equity and bond markets.
Meanwhile, trade developments with China and other geopolitical issues remain key factors that could sway investor sentiment. Analysts note that, while the Treasury market has remained calm, any unexpected escalation in domestic politics or international trade could quickly trigger volatility.
Treasuries are thus poised in a delicate balance, with yields likely to respond dynamically as clarity emerges on both fiscal and economic fronts.