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On Monday, US government debt increased as investors purchased Treasuries, recovering from a decline experienced the previous week due to concerns related to President Donald Trump’s tariff policies. The yield on the 10-year Treasury, which influences government borrowing costs and affects financial asset pricing globally, decreased by 0.11 percentage points on Monday, settling at 4.38 percent. This marks the first decline in the 10-year yield since April 4, as yields move inversely to prices.
The adjustment followed the White House’s weekend decision to temporarily exempt smartphones and other consumer electronics from the extensive “reciprocal” tariffs introduced earlier this month. Despite President Trump having paused the majority of these duties shortly after their implementation last week, he had increased tariffs on China, raising concerns for US technology firms with significant exposure to China.
Ulrike Hoffmann-Burchardi, Chief Investment Officer of Global Equities at UBS Global Wealth Management, noted that while uncertainty regarding Trump’s tariffs remains, the pause on significant tech products suggests the administration is attuned to market stress.
Last week, the 10-year Treasury yield experienced a surge of approximately 0.5 percentage points, marking its most significant weekly rise since 2001. The extent of the sell-off in Treasuries, typically regarded as a premier safe-haven investment, has sparked worries that investors might be avoiding US assets in general.
Some investors believe that the pressure on US government debt has now created a favorable entry opportunity with higher yields than previously seen. Treasuries are known to gain value when economic growth shows signs of faltering, which Wall Street banks consider a potential outcome.
Mohit Mittal, Chief Investment Officer of Core Strategies at Pimco, commented on the attractiveness of government bonds for long-term investors. He suggested that if US economic growth continues to decline, future yields could be lower. Despite the pause in reciprocal tariffs and exceptions for tech products, Mittal remarked that Trump has created an environment of considerable uncertainty.
Mittal emphasized that until more certainty is achieved, businesses and consumers will proceed with caution, bringing a potential recession in 2025 closer. He identified this as the core narrative driving the bond market.
Meanwhile, US stock market investors have continued acquiring shares following a recent downturn, which had moved the market away from recent highs. The blue-chip S&P 500 index increased by 0.8 percent on Monday, reducing its losses for 2025 to 8.1 percent. Additionally, the tech-heavy Nasdaq Composite rose by 0.6 percent on Monday.