The recent rise in U.S. Treasury yields is linked to the deteriorating trade relations between the U.S. and China, raising investor concerns.
Increase in Treasury Yields
As of 5 a.m. ET, the 10-year Treasury yield rose over 2 basis points to 4.445%. The 2-year yield increased less than a basis point to 3.922%, while the 30-year yield jumped over 4 basis points to 4.981%. One basis point equals 0.01%, and yields move inversely to bond prices.
Trade Disputes Between the U.S. and China
Investors are focused on the worsening trade ties between the U.S. and China. Last week, President Donald Trump stated that China had broken a preliminary trade pact. On Monday, China rejected these accusations and claimed that the U.S. had broken the same agreement. The two sides had paused most tariffs for 90 days, but doubt has been cast on whether that pause will hold.
Future of Tariff Policy
Adding to concerns, Trump announced on Friday that tariffs on imported steel would double to 50% starting Wednesday. At the same time, his administration faces a court battle over existing tariffs. The U.S. Court of International Trade struck down many of the president's tariffs, but a federal appeals court later paused that ruling, keeping the duties in place for now. Deutsche Bank analysts note that tariff uncertainty is likely to linger for a long time.
The unpredictability of trade relations between the U.S. and China, along with increasing tariff policies and ongoing court disputes, continues to impact financial markets and economic growth.
