Treasuries Close Roughly Flat After Seeing Early Strength

After moving modestly higher early in the session, treasuries gave back ground over the course of the trading day on Monday.

Bond prices pulled back well off their early highs, ending the day roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 493 percent after hitting a low of 4.458 percent.

Treasuries initially benefited from their appeal as a safe haven amid after President Donald Trump threatened to impose a 25 percent tariff on all steel and aluminum imports into the U.S.

The latest tariff threat comes after Trump said last Friday he plans to announce reciprocal tariffs on many countries this week, with the U.S. imposing tariffs on imports equal to the rates imposed on American exports.

Buying interest waned over the course of the session, however, as traders shrugged off worries of a potential trade war.

“Perhaps investors have decided not to react every time Donald Trump yanks the steering wheel in another direction for fear of getting whiplash, or perhaps they’ve simply remembered how to operate in a world where volatility is baked in,” says AJ Bell head of financial analysis Danni Hewson.

Traders may also have been reluctant to make significant moves ahead of the release of several key U.S. economic reports in the coming days.

Reports on consumer and producer inflation are likely to be in focus, while reports on retail sales and industrial production may also attract attention.

Traders are also likely to keep a close eye on congressional testimony by Federal Reserve Chair Jerome Powell, looking for clues about the outlook for interest rates.

Amid another quiet day in terms of U.S. economic data, trading on Tuesday may be impacted by reaction to Powell’s testimony before the Senate Banking Committee.

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