U.S. Treasury yields climbed following the announcement of a trade agreement between the U.S. and China, generating optimism among investors.
Rise in Treasury Yields
The 10-year Treasury yield rose nearly eight basis points to 4.433%, while the 2-year yield increased by more than nine basis points to 4.006%. These changes are attributed to the agreement between the two largest global economies.
The U.S.-China Trade Agreement
Both countries agreed to slash tariffs on each other's imported goods. The U.S. had previously imposed 145% tariffs on Chinese goods, while China applied 125% tariffs on U.S. products. After negotiations, tariffs were reduced to 10% from 125%. However, the 20% tariffs on Chinese imports concerning fentanyl remain unchanged.
Market Reaction
U.S. stock futures surged sharply after the announcement of the trade deal. Nasdaq was up 3.7%, S&P 500 futures gained 2.7%, and the Dow Jones increased by more than 840 points or 2%. The U.S. Dollar Index also rose by 1.1%.
The U.S.-China agreement to reduce tariffs is having a positive impact on financial markets, but key economic data is expected in the coming days, which will be crucial for the further development of the situation.
