2025.04.0819:27:00UTC+00Treasuries Extend Yesterday's Substantial Pullback

Following the sharp pullback seen over the course of the previous session, treasuries saw further downside during trading on Tuesday.

Bond prices regained ground after an early slump but once again came under pressure in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.7 basis points to 4.262 percent.

The ten-year yield added to the 17.0 basis point surge during Monday's trading, climbing further off the six-month closing low set last Friday.

The early weakness among treasuries partly reflected optimism about negotiations on President Donald Trump's new tariffs that could help avoid a global trade war.

Treasury Secretary Scott Bessent said approximately 70 countries have approached the White House about trade talks, with Japan purportedly getting priority status.

"I think you are going to see some very large countries with large trade deficits come forward very quickly," Bessent said during an interview on CNBC. "If they come to the table with solid proposals, I think we can end up with some good deals."

Trump also said in a post on Truth Social that he had a "great call" with South Korea's acting President Han Duck-soo and said the country's "top TEAM is on a plane heading to the U.S., and things are looking good."

Selling pressure waned over the course of the session amid concerns about rising tensions between the U.S. and China but reemerged after the Treasury Department revealed this month's auction of $58 billion worth of three-year notes attracted below average demand.

The three-year note auction drew a high yield of 3.784 percent and a bid-to-cover ratio of 2.47, while the ten previous three-year note auctions had an average bid-to-cover ratio of 2.61.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Developments on the tariff front are likely to remain in the spotlight on Wednesday, while traders are also likely to keep an eye on the minutes of the latest Federal Reserve meeting.