By Joy Wiltermuth and Jamie Chisholm
Bond yields dropped on Monday after President Donald Trump over the weekend shrugged off the possibility that his policies would cause a U.S. recession, setting the stage for 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 BX:TMUBMUSD02Y dipped by 7 basis points to 3.925%. Yields move in the opposite direction to prices.
— The yield on the 10-year Treasury BX:TMUBMUSD10Y fell 9 basis points to 4.225%.
— The yield on the 30-year Treasury BX:TMUBMUSD30Y retreated 8 basis points to 4.535%.
What’s driving markets
Investors were selling U.S. stocks and buying 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.
U.S. Treasury Scott Bessent on Friday said: “The market and the economy have just become hooked. 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 are 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 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 1009ET
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