By Joy Wiltermuth and Jamie Chisholm
Bond yields dropped sharply on Monday after President Donald Trump over the weekend shrugged off the possibility that his policies would cause a U.S. recession, triggering another brutal day for the stock market.
Investors also were monitoring data showing deflationary pressures building in China.
What’s happening
— The yield on the 2-year Treasury note BX:TMUBMUSD02Y tumbled 10.6 basis points to 3.895%, logging its lowest finish since Sept. 4, according to Dow Jones Market Data. Yields move in the opposite direction to prices.
— The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 10.4 basis points to 4.213%.
— The yield on the 30-year Treasury BX:TMUBMUSD30Y retreated 7.7 basis points to 4.539%.
— It was the biggest daily yield drop for the 10-year and 30-year rates since Feb. 13 and Feb. 25, respectively.
What’s driving markets
Investors sold U.S. stocks and bought safe-haven Treasurys, pushing bond yields lower on concerns that investors might be on their own if the economy not only slows but falters in the face of tariff uncertainty and public-sector job cuts.
In an interview with Fox News on Sunday, Trump refused to rule out the possibility of a recession for the U.S. this year, saying that his tariff strategy and attempts to cut government spending were part of a necessary transition that in the short term could cause problems for the world’s biggest economy.
Kevin Hassett, head of the National Economic Council, attempted to push back on growing economic concerns Monday in an interview with CNBC, but stocks and bond yields continued to drop.
“The market and the economy have just become hooked,” Treasury Secretary Scott Bessent said on Friday. “We’ve become addicted to this government spending, and there’s going to be a detox period.”
Jim Reid, a strategist at Deutsche Bank, said that “taken at face value, these quotes suggest that their pain level is higher than most would have believed a few weeks ago.”
No top-drawer U.S. economic data releases were scheduled for Monday. All the focus this week will be on the consumer-price index report for February, set to be released on Wednesday.
“Meanwhile, the long end of the [Treasury yield] curve will face some downward pressure if those in the executive branch keep shrugging off policy-driven growth concerns,” Will Compernolle, a macroeconomic strategist at FHN Financial, said in a Monday client note.
Also pressuring global bond yields on Monday was news from China that the world’s second-biggest economy was experiencing greater deflationary pressures. The consumer-price index for the year to February was down 0.7%, while producer prices over the same period were down 2.2%, the 30th consecutive month of factory-gate price drops.
However, Deutsche Bank’s Reid noted: “Overall there was likely some distortion due to the timing of Lunar New Year, so we’ll get a better read next month.”
-Joy Wiltermuth -Jamie Chisholm
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03-10-25 1549ET
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