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U.S. Treasury yields plunged significantly on Wednesday following a report revealing that private sector job creation in May reached its lowest point in over two years. The report prompted President Donald Trump to call on the Federal Reserve to reduce interest rates, coinciding with the implementation of a 50% steel tariff. The yields on 2-year, 10-year, and 30-year Treasury bonds all declined by more than 6 basis points, indicating a sharp rise in bond prices.

According to payrolls processing firm ADP, the private sector saw a mere increase of 37,000 jobs in May, a substantial decline from April's downwardly revised figure of 60,000 and far below the Dow Jones forecast of 110,000. This marked the weakest monthly job growth since March 2023. The lackluster job creation data comes just days ahead of the Bureau of Labor Statistics' nonfarm payrolls report, which is forecasted to show a gain of 125,000 jobs with an unemployment rate steady at 4.2%.

President Trump responded to the disappointing ADP numbers by urging Federal Reserve Chairman Jerome Powell to cut interest rates. Reports suggest that a recent meeting between Trump and Powell at the White House turned confrontational. Investor concerns over a slowing economy intensified further when the ISM services index for May dropped to 49.9%, falling below the threshold that separates expansion from contraction and missing the Dow Jones estimate of 52.1%. The survey reported declines across new orders, production, inventories, and order backlogs.

In addition to worries over job growth and economic activity, the U.S. implemented a hefty 50% tariff on imported steel and aluminum starting Wednesday. The increased tariffs are expected to slow down industry activities and raise prices on a wide range of products, from oil drilling equipment to beer and soda cans. President Trump defended the move, claiming that steeper tariffs will strengthen the U.S. steel industry’s security.

Further compounding investor anxiety were the faltering trade negotiations between the U.S. and China. President Trump described it as "extremely hard" to negotiate with China's President Xi Jinping, while China's foreign minister urged the U.S. to "meet China halfway." A senior White House official indicated that Trump and Xi are expected to speak later this week.

The Federal Reserve's Beige Book, a summary of the current economic conditions, was also set to be released on Wednesday afternoon, providing investors with additional insights into the state of the U.S. economy.