US yields little changed ahead of heavy data slate
U.S. Treasury yields eased to near three-week lows on Monday, marking the half-way unwind from this month's bond rout as a dearth of new tariff news allowed investors to zero in on impending economic data, crowned by Friday's payrolls report.
Trading was more muted than in recent weeks of high volatility, when U.S. President Donald Trump sent Treasuries tumbling and benchmark yields up about 70 basis points amid fear that his erratic announcements on import levies made dollar-based assets less secure, and U.S. and global economic growth less assured.
With month-end on Wednesday, along with the first read on first quarter gross domestic product and the personal consumption expenditures price index, traders look loath to take any unnecessary risk. Other labor market data is also sprinkled through the week, in the run-up to Friday's all-important April employment release.
"Generally, the data isn't likely to show a full-blown collapse, but it will continue to keep investors nervous that growth is slowing," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, New York.
The yield on the benchmark U.S. 10-year Treasury note (US10YT=TWEB) fell to its lowest since April 8, and in late trade was off 3.9 basis points from Friday afternoon at 4.227%.
There have been not-entirely-convincing signs that the U.S. and China could be willing to de-escalate trade tensions.
Competing claims on the state of negotiations from Beijing and Trump highlighted the uncertainties facing investors seeking to navigate Trump's upending of world trade.
HIGH RISK OF RECESSION
The week also marks 100 days since Trump took office and began his assault on trade, and confidence in America. Despite an initial rally in equities after his election in November, the S&P 500 
SPX has declined about 5% since then, and fallen more than 10% from February's record high as markets assess the potential impact of tariffs.
Bonds had a wild ride, too, as investors reconsidered U.S. market supremacy. The 10-year yield rose from a low of 3.86% on April 4, two days after Trump's ill-received "Liberation Day" tariff unveiling, to 4.592% a week later. It has now fallen 36 of those 73 bps.
A majority of economists polled by Reuters said the risk of the global economy slipping into recession this year was high. But Trump's tariff rollercoaster has made the Federal Reserve's job even harder, given prospects for inflation to rise away from its 2% target even if growth slows.
The Federal Open Market Committee meets next week, with futures traders betting that it will, starting in June, lower rates by 25 basis points at least four times this year from the current range of 4.25%-4.50%, where the policy rate has stood since December.
While the auction calendar is light this week, the U.S. Treasury will release its borrowing estimates for April through June and July through September later Monday and its refunding plans across maturities Wednesday morning.
The yield on the 30-year bond (US30YT=TWEB) eased 3.5 bp to 4.703%.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes (US2US10=TWEB), seen as an indicator of economic expectations, was at a positive 52.7 basis points about 4.5 bp steeper than Friday.
The two-year (US2YT=TWEB) U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 6.3 bp to 3.699%, plumbing its lowest since April 9.
The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) (US5YTIP=TWEB) was last at 2.324% after closing at 2.331% on April 25.
The 10-year TIPS breakeven rate (US10YTIP=TWEB) was last at 2.25%, indicating the market sees inflation averaging about 2.3% a year for the next decade, higher than the Fed's target.
