A fall in US bond yields is piling pressure on the dollar, as investors bet that slowing economic growth will push the Federal Reserve to keep cutting interest rates despite persistent inflation.

The 10-year Treasury yield fell 0.09 percentage points on Tuesday to 4.3 per cent, the lowest level since mid-December. The decline from above 4.8 per cent last month has been prompted by a worsened outlook for US growth, after a string of data showed weak consumer and business sentiment.

That has hit the dollar, which is now down 2 per cent this year against a basket of its peers, confounding expectations that Donald Trump’s return to the White House would continue to bolster the currency. The dollar had previously strengthened on bets that the inflationary effect of the new president’s tariffs and immigration curbs would prevent the Fed from cutting rates.