U.S. Treasury yields were higher on Monday on reports President Donald Trump was backing off an all-out trade war, raising hope the U.S. economy could keep its expansion going.
The benchmark 10-year Treasury note yield rose more than three basis points to 4.282%, and the 2-year Treasury yield was also three basis points higher at 3.979%.
One basis point is equal to 0.01% and yields and prices move in opposite directions.
The Wall Street Journal and Bloomberg News reported that planned tariffs from April 2 by the White House were set to be more narrow in scope and will likely exclude some industry-specific duties. Stock futures gained and bond prices fell early Monday on the reports.
Trump hinted at “flexibility” for his reciprocal tariff plans on trading partners, in comments made on Friday, which provided a hint of optimism for investors.
“People are coming to me and talking about tariffs, and a lot of people are asking me if they could have exceptions,” Trump told reporters in the Oval Office. “And once you do that for one, you have to do that for all.”
“I don’t change. But the word flexibility is an important word … sometimes it’s flexibility,” he added. “So there’ll be flexibility, but basically it’s reciprocal.”
Investors are also expecting a flurry of economic data this week, with the PMI release on Monday. It will offer insight into the performance of the manufacturing, services and construction sectors. A reading above 50 indicates expansion while a reading below 50 points to a contraction.
They will also await new home sales data on Tuesday, and weekly initial jobless claims on Thursday.
The big data release of the week will be the personal consumption expenditures index — the Fed’s preferred inflation gauge — on Friday.