10-Year Treasury Bill yield exceeds 3%

Treasury prices tumbled on Tuesday, pushing yields higher after equities surpassed a round of US tariffs between the US and China.

The yield on 10-year treasury bills

TMUBMUSD10Y, + 2.11%

up 4.6 basis points to 3.048%, close to its three-month high. If the Reference Maturity Return exceeds 3.109%, it would set a new seven-year high, according to Tradeweb data.

In other exchanges, the yield of 2-year notes

TMUBMUSD02Y, + 0,90%

was up 1.3 basis points to 2.799%, a record level in December, while the 30-year bond yield

TMUBMUSD30Y, + 2.00%

up 5.7 basis points to 3.195%, close to its three-month high.

Bond prices fall as yields rise.

Treasuries were put under pressure after stocks gave up the resumption of trade tensions, which translated into a lower appetite for havens. The S & P 500 index

SPX, + 0.54%

and the Nasdaq Composite Index

COMP + 0.76%

saw firm gains, while in Asia, the Shanghai Composite

SHCOMP, + 1.82%

jumped 1.8%. This evolution contrasts with previous episodes where commercial uncertainty had sparked a rally in the US government paper.

President Donald Trump continued the second round of tariffs in addition to initial tariffs on $ 50 billion worth of Chinese products. Although this decision was widely expected, it will increase the stakes for Beijing and Washington who have struggled to return to the negotiating table. On Tuesday, China fought back with its own tariffs on $ 60 billion worth of US goods.

See: China-United States Trade war may last 20 years, says China's best-known CEO

However, many market players considered that the latest business development was less severe than expected, with Chinese tariffs starting at 10% instead of 25% (even if they reach this level at the end of the year). .

"The most recent measurements contain some phasing elements, creating additional room for maneuver. However, it is not yet sure that the new talks between the two countries will start soon, because it remains to be seen whether China is ready to resume the talks under such pressure "

Some strategists have suggested that selling in the bond market could also be motivated by fears that China may use other measures to retaliate against the United States. As the largest foreign owner of Treasurys, some say China may try to dump the bonds to push up US borrowing costs.

"The market is afraid of a lasting trade war with China and possible retaliation by the Chinese. An effective way could be to start selling their large US assets, "said Tom di Galoma, chief executive of Treasurys at Seaport Global Securities.

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