Treasuries Pull Back Off Early Highs But Remain In Positive Territory

(RTTNews) - Treasuries showed a strong move to the upside in early trading on Monday but gave back ground as the day progressed.

Bond prices pulled back well off their early highs but remained in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.6 basis points to 4.543 percent after hitting a low of 4.462 percent.

Treasuries initially benefited from their appeal as a safe haven after President Donald Trump officially imposed a 25 percent tariff on imports from Canada and Mexico and a 10 percent tariff on imports from China.

A statement from the White House said Trump is taking "bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country."

Trump also threatened possible tariffs against the United Kingdom and the European Union, marking a significant escalation.

However, buying interest waned after Trump confirmed he has reached an agreement with Mexican President Claudia Sheinbaum to pause the tariffs on Mexico for one month.

The tariff pause comes after Sheinbaum said Mexico will immediately reinforce its northern border with 10,000 members of its National Guard to prevent drug trafficking from Mexico to the United States, particularly fentanyl.

A report from the Institute for Supply Management showing U.S. manufacturing activity expanded in the month of January following 26 consecutive months of contraction may also have reduced the safe haven appeal of bonds.

The ISM said its manufacturing PMI rose to 50.9 in January from 49.2 in December, with a reading above 50 indicating growth. Economists had expected the index to inch up to 49.8.

Trading on Tuesday may be impacted by reaction to the latest U.S. economic data, including reports on job openings and factory orders.