U.S. Treasury yields inched lower on Monday as investors weighed a surprise tariff exemption and remained cautious about uncertainty in the bond market.
At 4:41 a.m. ET, the benchmark 10-year Treasury was down over 2 basis points to 4.463%. Meanwhile, the 2-year Treasury yield was also lower by more than 2 basis points at 3.926%.
One basis point is equal to 0.01% and yields move inversely to prices.
Investors looked on amid new tariff announcements late Friday evening: Smartphones, computers, electronic devices, and components like semiconductors are now exempt from reciprocal tariffs, according to new guidance from the U.S. Customs and Border Protection.
The White House said late Friday that the exemptions were made because U.S. President Donald Trump wants to ensure that companies have time to move production to the United States. Trump suggested on Sunday that the exemptions aren’t permanent.
Meanwhile, investors remain on edge after unusual volatility in the bond market last week, with the 10-year yield rising over 50 basis points, one of the biggest increases on record. Once a safe haven asset, 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.
It’s quiet on the economic data front this week, but investors will await retail sales data on Wednesday. They are also anticipating a speech from Federal Reserve Chairman Jerome Powell on Wednesday, which they will examine for clues about future monetary policy decisions.
