U.S. Treasury yields fell Monday as investors weighed a surprise tariff exemption after a wild week of trading in the bond market that unnerved traders.
At 5:44 a.m. ET, the benchmark 10-year Treasury was down nearly 5 basis points at 4.444%. The 2-year Treasury note yield slipped 3.4 basis points to 3.92%.
One basis point is equal to 0.01% and yields move inversely to prices.
Smartphones, computers, electronic devices and components like semiconductors are now exempt from reciprocal tariffs, President Donald Trump announced over the weekend.
The White House said late Friday that the exemptions were made because Trump wants to ensure that companies have time to move production to the United States. However, Trump suggested on Sunday that the exemptions aren’t permanent.
The moves come after a week of unusual volatility in the bond market, with the 10-year yield rising over 50 basis points — one of the biggest increases on record. This comes even after Trump announced a 90-day tariff pause on goods from other countries last week. While the 10-year yield briefly dipped on the news, it still scaled back above 4.5% on Friday.
Once a safe haven asset, some traders are now speculating whether foreign investors like Japan and China will dump their Treasury holdings.
Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, told CNBC that he hasn’t seen direct evidence that foreign investors are dumping Treasurys, but the fear alone is enough to move the market.
“Markets are very confidence-driven. Even the perception that foreign investors are trying to step away from Treasury markets can trigger pretty significant panic,” Goldberg said.