NEW YORK: US Treasury yields rose on Monday as investors reduced their holdings to make room for a wave of supply and traders rolled back their safe-haven positions after US President Donald Trump postponed an increase in tariffs on China.
The US Treasury Department sold $168 billion in government securities on Monday, including $40 billion in two-year notes and $41 billion in five-year debt, to solid investor demand.
The Treasury also auctioned $48 billion in three-month bills and $39 billion in six-month bills.
"We have a lot of supply coming today," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in New York. "Probably the bigger news is the announcement from Trump about delaying the tariff hike on China. That's why Treasuries are softening up."
Trump's move postponed a planned increase in duties on $200 billion worth of Chinese imports into the United States to 25 percent from 10 percent if the world's two biggest economies were unable to clinch a trade deal by Friday.
The respite from a further escalation in trade tensions between Washington and Beijing bolstered global stock prices, fueling a 6 percent rally in Chinese blue chip shares.
Wall Street's three main indexes traded higher with the S&P 500 index up 0.14 percent.
The yield on benchmark 10-year Treasury notes was up 1.8 basis points at 2.6734 percent.
Two-year Treasury notes were up 2.1 basis points at 2.5120 percent.
Traders are awaiting fresh clues on the Federal Reserve's latest view on the economy and monetary policy. Fed Chairman Jerome Powell will testify before the Senate Banking Committee on Tuesday, in the first of a two-day appearance before federal lawmakers.
Powell and other US policy-makers have signaled they favor patience before raising key lending rates again due to recent signs of slowing economic growth. The futures market implied traders bet the central bank would not raise interest rates at all in 2019.
"They have definitely made a dovish turn since last fall," said Michael Cuggino, president of Permanent Portfolio Funds in San Francisco.
Cuggino was uncertain whether the central bank is on hold for the remainder of 2019. "I don't think the Fed is done. They seem to be on hold for now."
The Treasury will sell $32 billion in seven-year government notes at 1 p.m. (1800 GMT) on Tuesday.
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