U.S. Treasuries fell, a sign that investors are favouring riskier assets, after reports that the tariffs U.S. President Donald Trump is set to announce next month will be more targeted than he has indicated.
The yield on the 10-year note rose about 5 basis points to 4.3%. German bonds also fell modestly, with the equivalent rate climbing 2 basis points to 2.8%, snapping five straight days of gains. S&P 500 futures rallied more than 1%.
The moves follow reports that Trump’s announcement of universal, reciprocal trade tariffs on April 2 — a date he’s referred to as “liberation day” — will be narrower than initially expected. That’s helping temper some of the market’s fears about the impact on global trade and growth.
The news of targeted tariffs “appears to be driving a rebound in sentiment,” said Gennadiy Goldberg, head of US interest rate strategy at TD Securities. But with the heightened uncertainties, “markets are truly on a razor’s edge here.”
US 10-year Treasuries have traded in a fairly narrow range through March after the yield retreated from the year’s high of about 4.80% in mid-January. Trump’s tariff and trade-war threats sparked fears of a recession, pushing investors out of stocks and into the safety of bonds.
Despite Monday’s weakness, investors including Nicolas Jullien, global head of fixed income at Candriam, expect US yields to retreat further as indicators show confidence in the nation’s economy is eroding. The US Purchasing Managers’ Index will give a fresh look at private business activity later Monday.
“Surveys are also seeing downtrends as trade uncertainty is peaking and impacting investor confidence,” Jullien said. “We do see a downward trend on US 10-year rates and in the event of a risk-off scenario brought on by a continued downturn in markets.”
Reinforcing that view is Treasury Secretary Scott Bessent’s campaign to push down bond yields, which has led some rates strategists at major banks to cut their year-end forecasts.
“The softening of tariff talk may indicate the ‘Trump put’ on equity market may still apply, in addition to the ‘Bessent put’ on Treasuries,” said Tracy Chen, a portfolio manager at Brandywine Global Investment Management.
The concerns about slowing US growth stand in contrast to the euro area, where PMI data published earlier Monday showed activity is improving, albeit from a low base.
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Alice Gledhill and Ye Xie, Bloomberg News
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U.S. President Donald Trump’s reciprocal tariffs on trading partners are set to take effect on April 2, a day he has proclaimed as “Liberation Day” for American trade. CTV News will have extensive coverage across all platforms:
- CTVNews.ca will have in-depth coverage, real-time updates, and expert analysis on what the tariffs will mean for Canadians.
- CP24.com will report on any developments out of Queen’s Park and what the tariffs means for the people of the GTHA.
- BNNBloomberg.ca will explain what this means for the business community, investors, and the market.
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