Bond Market Update

Boosted by Tariff Threat

• U.S. Treasuries trade on their highs after adding to their initial gains. Treasuries rallied to fresh highs about 90 minutes ago, reacting to a social media post from President Trump, in which he said that China is becoming "very hostile" with its export controls and threatened "a massive increase of tariffs on Chinese products." He also said that he no longer sees a reason to meet with President Xi later this month. The comments have reintroduced the risk of new trade barriers like higher tariffs, which has given a boost to Treasuries while pressuring equities. With today's rally, yields are now sliding toward their September lows with the 30-yr yield just five basis points away from its lowest level from last month while the 2-yr yield remains seven basis points above its September low.
• Yield Check:
  • 2-yr: -7 bps to 3.53%
  • 3-yr: -8 bps to 3.54%
  • 5-yr: -9 bps to 3.65%
  • 10-yr: -9 bps to 4.06%
  • 30-yr: -8 bps to 4.66%