Treasury yields down

US Treasury yields fell on Monday, as investors favored low-risk government bonds over stocks and other risky assets due to worries about a global slowdown stemming from renewed trade tension between China and the United States. Wall Street's major indexes at one point were down nearly 1% after US President Donald Trump on Sunday threatened to increase tariffs on $200 billion of Chinese-made goods to 25% from 10%, reversing his February decision to hold them at 10% as the world's two biggest economies were making progress on trade negotiations.
Investors fear that derailed trade talks between Washington and Beijing will touch off a global slowdown, analysts said, offsetting recent encouraging data on China, Europe and the United States. "It's primarily concern about trade," Jonathan Cohn, interest rate strategist at Credit Suisse in New York said of the reason behind the fall in yields. "If a trade deal falls through, there's more scope for yields to rally."
In late US trading, the yields on benchmark 10-year Treasury notes were 2.4998%, down 3 basis points from late on Friday, while the two-year yields were 2.3107%, down 2.8 basis points. The S&P 500 bounced off its initial lows, last down 0.39% Monday's drop in bond yields was mitigated by this week's Treasury supply and some investor caution in advance of the government's consumer price report due at 8:30 a.m. (1230 GMT) on Friday.
The US Treasury Department will sell $84 billion in coupon-bearing debt including $38 billion in three-year notes on Tuesday, $27 billion in 10-year notes on Wednesday and $19 billion in 30-year bonds on Thursday. These quarterly debt sales are expected to refund $55.4 billion to bondholders and to raise $28.6 billion in new cash for the federal government.
"The risk backdrop is still pretty strong for Treasury supplies to be taken down smoothly," Cohn said. Signs of tame domestic inflation have also bolstered the case to own longer-dated bonds, analysts said. Some Federal Reserve officials said a recent pullback in price pressure is likely temporary and inflation should move back toward the central bank's 2% goal. Some recent weakness in inflation could be "transitory," suggesting no reason to adjust monetary policy at this point, Philadelphia Fed President Patrick Harker said on Monday.