Fed Holds Rates at 4.25%–4.50% as Treasury Yields and Borrowing Costs Stay Firm

U.S. Treasury yields and consumer borrowing rates have shown remarkable stability as the Federal Reserve prepares to hold its benchmark federal funds rate at 4.25%–4.50%.

• At 4:09 a.m. ET, the 10-year yield was 4.414%, the 2-year at 3.922% and the 30-year at 4.959%.

• Credit card rates lingered near 20.1%, 30-year mortgages between 6.6%–7.1% and auto loans saw minimal movement.

With traders pricing a 97% chance of no rate move, all eyes now turn to Thursday's personal consumption expenditures index for fresh inflation clues.

UK Exports Gain Price Edge
As the EU-US trade agreement locks in a 15% levy on EU goods—down from a threatened 30%—the UK secures a lower 10% baseline tariff on its exports, potentially boosting British shipments to the U.S. Experts tell CNBC that American firms could switch sourcing to cheaper UK products, and EU companies might relocate manufacturing to Britain to avoid steeper duties.

Indirect Upside from Averted Downturn
Investec's Philip Shaw highlights another benefit: by averting a harsher 30% U.S. tariff, the EU sidesteps recession risks that could have dented UK exports to Europe. However, Dentons lawyer Beth McCall warns that the five-point tariff gap may take time to influence contracts and buyer behaviour.

Stocks traded mixed and oil prices slipped early Tuesday as the market shifted its focus from the weekend's EU-US tariff truce to upcoming U.S. data, corporate earnings and the Federal Reserve's July policy meeting. The 15% baseline levy on EU imports—while below the initially threatened 30% rate—leaves U.S. tariffs at an 18.2% average, underscoring persistent trade barriers.

Key points:

• S&P 500 and Nasdaq hovered near record highs, while the Dow wavered around 44,840.


• Brent crude slipped to $69.94 per barrel, and WTI fell to $66.66.


• Investors are also eyeing U.S.–China talks in Stockholm, GDP growth figures and tech earnings from Apple, Microsoft, Meta and Amazon.

ECB to include climate risk in lending operations by mid-2026 as consumer sentiment signals cooling price pressures.

Key points:

• The ECB's Governing Council on Tuesday said it will introduce a "climate factor" in its lending collateral valuations from the second half of 2026, reducing the value of assets deemed vulnerable to climate shocks.


• In June, euro zone consumers' median one-year inflation expectations fell to 2.6% from 2.8% in May, based on a survey of 19,000 adults.


• Longer-term inflation forecasts held at 2.4% (three years) and 2.1% (five years), while nominal income growth expectations remained at 1.0%.

Mortgage rates edged lower this week, with the average 30-year fixed rate falling to 6.79%, down 0.06 percentage points from last week, and the 15-year rate slipping to 5.99%. Despite this modest relief, home prices and ownership expenses remain near record levels, keeping affordability out of reach for many buyers.

• Experts warn that the Fed's hold-tight approach means rates won't plunge overnight.

• Jeb Smith of CNET Money says rates could drift lower if inflation cools, but tariffs and deficits may keep them elevated.

• Fannie Mae projects average 30-year rates around 6.5% by year-end 2025 and 6.1% in 2026.