Treasury prices came under pressure on Monday, pushing yields higher, as investors jumped into stocks and out of government paper, following the apparent end of the Trump administration’s tariff threat against Mexico.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, +1.17% climbed 5.9 basis points to 2.143%. The 2-year note yield TMUBMUSD02Y, -0.02% picked up 4.7 basis points to 1.900%. The 30-year bond yield TMUBMUSD30Y, +0.84% rose 5.4 basis points to 2.623%. All three maturities staged their biggest daily climb since April 1. Bond prices move in the opposite direction of yields.
See: Don’t expect a Mexico tariff deal to halt the U.S. Treasury 10-year slide to 2%, analyst says
What’s driving Treasurys?
On Friday, President Donald Trump said that he had declined to place tariffs on Mexican imports which he had threatened as a way to stanch the flow of migrants to the U.S. southern border. But he said he could still impose import levies if Mexico didn’t cooperate on border issues.
Group of 20 finance leaders on the weekend pledged to protect the global economy amid growing concerns around trade tensions. U.S. Treasury Secretary Steven Mnuchin said he had a “constructive” talk with People’s Bank of China Governor Yi Gang.
The sharp rise in global equities on the wave of trade optimism helped weigh on appetite for government paper. The Stoxx Europe 600 SXXP, +0.88% was up 0.2%, while Japan’s Topix index 180460, +0.54% booked a gain of 1.3%. The S&P 500 SPX, +0.47% and the Nasdaq Composite COMP, +1.05% were on track to string together a five-day winning streak.
Read: Time to panic on economy? No, but ongoing trade wars give a taste of unpleasant future
What did market participants say?
”Treasury yields are higher ... after President Trump’s weekend suspension of plans to impose tariffs on all imports from Mexico. The weekend selloff more than retraced Friday’s bond market improvement after an unexpectedly weak payrolls report,” wrote Jody Lurie, director of fixed income at Janney Montgomery Scott.
What else is on investors’ radar?
In economic data, April’s job openings and labor turnover survey came in at 7.4 million, suggesting demand for labor remained strong. This come after a disappointing employment report on Friday has investors attuned to signs of weakness in the jobs market.