U.S. government debt yields rose on Monday after the European Union granted the United Kingdom an extension for rounding out its Brexit and corporate profits on Wall Street continued to come in better than feared.
The latest climb in yields comes after the EU decided to approve the U.K.'s request for a Brexit extension until Jan. 31.
European Council President Donald Tusk, who chaired the talks among the 27 European governments, announced the decision Monday on Twitter: "The EU27 has agreed that it will accept the U.K.'s request for a Brexit flextension until 31 January 2020. The decision is expected to be formalised through a written procedure."
Though the move was widely anticipated, the head of BMO Capital rates strategy noted that even the incremental positive was enough to foster the bearish atmosphere around government yields.
"With Brexit now seen decidedly in the category of 'a tomorrow problem' and very little anticipated progress on the trade war, characterizing the next few sessions as a calm in the 'global uncertainty' storm is apropos," wrote BMO's Ian Lyngen. "This is not to suggest the ongoing global headwinds that have complicated the Fed's tasks are subsiding, but simply taking a respite as month-end gives way to the final stretch into the New Year."
Traders are likely to monitor stock markets in what is set to be the busiest week for corporate earnings. Elsewhere, the U.S. trade representative said Friday that Beijing and Washington have "made headway on specific issues and the two sides are close to finalizing some sections of the agreement."
The world's two largest economies have recently pushed for a trade agreement after a tariff conflict that has soured business sentiment and global markets.