Focus is now on Tuesday's inflation data for any signs of a pickup in price pressures. The report will be the first to show tariff-related costs.

Powell said as policymakers look for more clarity on tariff policies, the risks of higher inflation and unemployment have increased due to President Donald Trump's sweeping levies.

The declines on Thursday pushed two- to 10-year yields higher by at least 10 basis points on the day after President Donald Trump urged people to buy stocks based on the latest trade developments.

Federal Reserve Gov. Michael Barr said global supply chain disruptions and inflation caused by tariffs could weigh heaviest on small businesses, especially those with little access to credit.

With the central bank expected to keep its benchmark rate steady at 4.25%-4.50% on Wednesday, traders will be scrutinizing comments by Fed Chair Jerome Powell.

The pace of hiring drove traders to dial back rate-cut bets that had steadily mounted as Trump's trade war unleashed havoc in financial markets and sowed fears of a US recession.

The labor market continues to cool gradually, a sign that businesses facing heightened uncertainty and turmoil didn't significantly alter their hiring plans.

The selling comes after overseas investors made record purchases of US corporate debt in 2024. Official data shows the demand slowing in February.

The Federal Reserve's preferred inflation reading fell in March, but the positive reading came before new trade policies hit the economy.

As President Donald Trump approaches his 100th day in office, he has generated a growing list of unknowns, forcing traders to focus on a broad array of issues beyond just the likely path of interest rates.