US Treasury yields tick higher as trade war fears calm

Key Points
  • Equity markets rallied while bond prices fell Monday after reports that China and the United States may be negotiating to improve trade relationships.

U.S. government debt yields traded slightly higher on Monday as fears of a growing trade war appeared to relax.

The yield on the benchmark 10-year Treasury note rose slightly to 2.852 percent at 4:10 p.m. ET, while the yield on the 30-year Treasury bond floated higher to 3.084 percent. Bond yields move inversely to prices.


Equity markets rallied while bond prices fell Monday after The Financial Times reported China offered to buy more semiconductors from the U.S. to help cut its trade surplus with the U.S., hoping to avert a larger trade dispute.

The Wall Street Journal also reported that the U.S. and Beijing are working to improve U.S. access to China's markets, a key geography for many of the world's largest companies.

The positive news on trade comes just days after President Donald Trump signed an executive memorandum last week that would inflict tariffs on Chinese imports — of up to $60 billion. China retaliated, with their own set of levies, drawing up a list of 128 U.S. products that could be possible retaliation targets.

The Treasury Department auctioned $30 billion in two-year notes at a high yield of 2.31 percent. The bid-to-cover ratio, an indicator of demand, was 2.91. Indirect bidders, which include major central banks, were awarded 44.5 percent. Direct bidders, which includes domestic money managers, bought 14.1 percent.

The Treasury is set to sell even more debt this week as the government raises more money to finance a sharp increase in spending. President Donald Trump signed a $1.3 trillion budget Friday in addition to a $1.5 trillion tax cut passed in December.