Treasuries Give Back Ground After Yesterday's Surge

(RTTNews) - Treasuries moved to the downside during trading on Tuesday, giving back ground after skyrocketing over the course of the previous session.

Bond prices moved lower early in the session and remained firmly negative for the remainder of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.7 basis points to 4.302 percent.

The pullback by treasuries may partly have reflected profit taking after the ten-year yield plunged by 14.5 basis points during Monday's session.

Traders were also reacting to President-elect Donald Trump's latest threats to impose increased tariffs on Mexico, Canada and China.

In a post on his social media platform Truth Social, Trump said he would impose a 25 percent tariff on all products from Mexico and Canada on his first day in office, blaming the countries for the influx of illegal immigrants and illicit drugs into the U.S.

"This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" Trump said.

Trump said in a subsequent post that he would also impose an additional 10 percent tariff on Chinese products, claiming the country has not done enough to stop the "massive amounts of drugs, in particular Fentanyl, being sent into the United States."

The President-elect's threats partly offset the optimism generated in reaction to news he intends to nominate Scott Bessent as Treasury Secretary. Bessent has previously called for Trump's planned tariff increases to be implemented gradually.

Treasuries saw continued weakness as the minutes of the Federal Reserve's latest monetary policy meeting revealed officials believe it will be appropriate to "gradually" lower interest rates.

The minutes said officials feel a gradual approach to lowering rates to a more neutral stance will be appropriate if economic data come in "about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment."

The Fed said participants also noted that monetary policy decisions were not on a "preset course and were conditional on the evolution of the economy and the implications for the economic outlook and the balance of risks."

Trading on Wednesday may be impacted by reaction to a slew of U.S. economic data, including the Fed's preferred readings on consumer price inflation.