10-year Treasury yield climbs back to 2.9%

  • North Korea told a South Korean delegation that it was willing to talk with the U.S. about ceding nuclear weapons and normalizing relations.
  • When it comes to tariffs talk, fears eased Monday after Trump suggested in a tweet that he could drop tariffs if a "new and fair" NAFTA agreement was signed.

U.S. government debt yields slipped from earlier highs Tuesday after a report said that President Trump was convinced Gary Cohn — his chief economic adviser — would leave the administration if tariffs on steel and aluminum were implemented.

Yield had started the day higher after North Korea said it was open to talking with the United States regarding denuclearization. Investors also monitored the growing rift between President Trump and pro-trade Republicans over steel and aluminum imports.

The yield on the benchmark 10-year Treasury note was flat at 2.883 percent at 4:05 p.m. ET, while the yield on the 30-year Treasury bond was also little changed at 3.149 percent. Bond yields move inversely to prices.

Bloomberg reported Tuesday that Trump has said he believes Cohn will resign if the new tariffs are implemented, citing people familiar with the matter. Cohn, formerly president at Goldman Sachs, is seen by many on Wall Street as an invaluable advisor to the president on economic and market issues.

In geopolitics, North Korea told a South Korean delegation in Pyongyang that it was willing to talk with the United States about ceding nuclear weapons and normalizing relations, the head of the delegation, Chung Eui-yong, told a media briefing.

That North Korea appeared willing to try to improve relations with Washington sent U.S. debt yields to near multiyear highs as traders pivoted away from safe havens. Open dialogue would follow a year of heated rhetoric between the two nations, often blamed for spooking investors through summer and fall 2017.

North and South Korea will hold their first summit in more than a decade in late April.

Symbol
Yield
 
Change
%Change
US 3-MO
---
US 1-YR
---
US 2-YR
---
US 5-YR
---
US 10-YR
---
US 30-YR
---

President Donald Trump's proposed tariffs on imports of steel and aluminum continued to capture headlines Tuesday.

Last week, President Donald Trump announced that the U.S. would be imposing new tariffs on aluminum and steel, before going on to threaten European carmakers with a tax on imports if the European Union retaliated over the U.S. administration's tariff plans.

However, on Monday, fears eased after Trump suggested in a tweet that he could drop tariffs if a "new and fair" NAFTA agreement was signed. Consequently, stock markets around the world rose following the comments, with Europe and Asia trading higher Tuesday.

On Monday, GOP leaders including House Speaker Paul Ryan implored the president to reconsider the taxes.

"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," said AshLee Strong, a spokeswoman for Ryan. "The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains."

Trump is set to meet with Stefan Lofven — the prime minister of Sweden — on Tuesday. The two leaders are expected to talk about investment, global security and trade.

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

Raising interest rates are the best shot to keep pushing the economy forward, Dallas Fed President Robert Kaplan said Tuesday.

"It's three for this year. I think we should get started sooner rather than later, though," he said during an interview on CNBC's "Squawk Box." A rate hike is widely expected in March judging by trading in the fed funds futures market.

Investors will be paying close attention to each speaker's comments in light of Fed Chair Jerome Powell's remarks last week, which underscored that the Fed could raise interest rates three or more times during 2018.