Treasury Yields Slide as Trade War Concerns Shake Markets

The US bond market saw a sharp rally on Monday, sending the benchmark 10-year Treasury yield below a key technical level as investors reacted to renewed uncertainty over trade policy.

The shift reflects growing concerns that tariffs set to be announced by President Donald Trump could slow economic growth and increase market volatility.

The 10-year Treasury yield fell to 4.21% on Monday morning, slipping below its 200-day moving average of 4.224%. The drop comes after last week’s bond rally and signals investor unease over upcoming trade policies. Analysts at BMO Capital Markets noted that the yield decline “speaks to the collective unease among market participants as the centerpiece of Trump’s trade agenda is set to be unveiled this week.”

Meanwhile, the 2-year Treasury yield fell below 3.88%, marking its third straight session of declines, while the 30-year yield dropped below 4.58%. US stock markets reflected similar concerns, with all three major indexes opening lower. Gold prices, often seen as a safe-haven asset, surged past $3,100 per ounce, setting a new record high.

Over the weekend, Trump announced plans to impose reciprocal tariffs on all trading partners, rather than limiting them to a select group of nations with trade imbalances. The Wall Street Journal reported that the administration is considering tariffs as high as 20% on a broad range of imports.

The renewed trade tensions have rattled markets, reversing last week’s brief period of relative calm. Investors are particularly worried about the potential economic slowdown that could result from increased tariffs. Economists surveyed by CNBC have revised their first-quarter GDP growth estimate to just 0.3%, a sharp decline from 2.3% in the same period last year.

Market participants are closely watching for further tariff announcements and potential retaliatory measures from US trading partners. Trump’s administration has dubbed Wednesday “Liberation Day,” when some tariffs are set to take effect. However, it remains unclear how broad the measures will be and how global markets will respond.

Investors will also be monitoring key economic reports this week, including the February JOLTS job openings data on Tuesday, the ADP private payrolls report on Wednesday, and the crucial March jobs report on Friday. Additionally, Federal Reserve Chair Jerome Powell is scheduled to speak on Friday, and his remarks could provide further insight into how the central bank views the evolving economic landscape.

With input from CNBC and Market Watch.