By Vivien Lou Chen
The magnitude of the bond-market rally earlier on Monday ‘speaks to the collective unease among market participants,’ BMO Capital Markets strategists say
Monday’s flight-to-safety trade into U.S. government debt temporarily sent the 10-year Treasury yield below an important technical level and shattered the previous sense of calm that many investors and traders had about the threat of U.S.-imposed tariffs.
The rally in Treasurys pushed the benchmark 10-year yield BX:TMUBMUSD10Y below its 200-day moving average for a good chunk of the day, and demand for long-dated maturities held up through the end of the session as month-end flows came into focus. The 10-year yield slid to as low as 4.18% on Monday, below its 200-day moving average of around 4.22%, and finished at almost 4.25% or its lowest closing level since March 20. Meanwhile, stocks DJIA SPX COMP finished mostly higher after clawing back from a lower open and gold (GC00) rose to a record high above $3,100 per ounce.Read: Goldman’s stagflationary vibe sees it cut S&P 500 target again and hike recession risk
“In short, the calm on the trade war front that we experienced early last week has been undone and the uncertainty regarding new tariffs has materially increased,” according to a note from BMO Capital Markets strategists Ian Lyngen and Vail Hartman released early in the day.
“The magnitude of the rally speaks to the collective unease among market participants as the centerpiece of Trump’s trade agenda is set to be unveiled this week,” the BMO strategists wrote. Conversations about a significant downshift in real growth “have become commonplace.”
Over the weekend, President Donald Trump said he is set to announce reciprocal tariffs on all nations and not just a smaller group of them. The Wall Street Journal also reported that an across-the-board hike of up to 20% was back on the table. The administration has said reciprocal tariffs are designed to even the playing field between the U.S. and its trading partners.
On Monday, the policy-sensitive 2-year yield BX:TMUBMUSD02Y finished marginally higher at 3.91%, while the 30-year rate BX:TMUBMUSD30Y dropped to 4.61% or the lowest closing level since March 21.
Read on: America needs to keep Treasury bond investors’ trust. Here’s the price if it’s lost.
-Vivien Lou Chen
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03-31-25 1606ET
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