US Treasury yields rose on Wednesday and stocks recovered much of their earlier losses, after China retaliated against the Trump administration's plan to impose tariffs on Chinese goods. China hit back with a list of similar duties on key US imports including soybeans, planes, cars, beef and chemicals.
Benchmark 10-year note yields rose to 2.784 percent, after earlier falling to 2.748 percent on safety buying. "We're trading some of this stuff in four to eight hour increments and changing our minds collectively as to what it really is going to mean," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee.
"In theory trade breakdowns don't impact the economy quickly, instead they are a damper on forward activity, however the stock market's acting like things are going to come to a screeching halt," Vogel added.
This week's major economic catalyst will be Friday's closely watched jobs report, which will be evaluated for accelerating jobs gains and wage pressures. The US economy added the biggest number of jobs in more than 1-1/2 years in February, at 313,000 jobs.
March's numbers may not be as bullish for the economy, however. "Data for March has a very strong tendency to disappoint," said Ian Lyngen, head of US rates strategy at BMO Capital Markets in New York.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 195,000 in the month. If jobs gains or wages come in below consensus on Friday 10-year yields may fall back below the 2.70 percent area to around 2.65 percent, Lyngen said.
The yields have been range-bound between 2.70 percent and 2.80 percent for the past week. The ADP National Employment Report on Wednesday showed employers adding 241,000 jobs in March. Other data showed that US services sector activity slowed in March, held down by a drop in new orders.
Federal Reserve Chairman Jerome Powell is also due to speak about the economic outlook at an event in Chicago on Friday.
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