Impact of U.S.-China Trade War on Treasury Yields

U.S. Treasury yields plummeted as China retaliated against Trump's tariff policies, causing fears of a global recession. Investors sought safety in bonds, pushing yields lower. JPMorgan raised recession odds to 60%. Jobs report showed mixed labor market picture.

Inverted Yield Curve as Recession Signal

The inverted yield curve, where the 10-year Treasury yield falls below the 3-month note, is seen as a reliable indicator of an upcoming recession. Despite some uncertainties, market experts are closely monitoring this relationship and anticipating potential interest rate cuts by the Fed as economic growth slows.

U.S. Financial Markets React to Scott Bessent's Nomination as Treasury Secretary

Investor Scott Bessent nominated as Treasury Secretary by Donald Trump resulted in a positive response in U.S. financial markets with stocks rising. Bessent aims to prioritize tax cuts and reduce the deficit. Treasury yields fell, reflecting reduced concerns about inflation and budget deficits. Global stock markets had mixed reactions.

Mortgage Rates and Treasury Yields

Mortgage rates could continue to drop even if Treasury yields remain stable, as they are currently significantly higher than historic levels. Banks have reduced their presence in the mortgage market, leading to less competition on rates.

Sinking Treasury Yields and Economic Concerns Ahead of Jobs Report

Sinking Treasury yields signal growing concerns about the economy ahead of Friday's jobs report, with weak manufacturing data and high jobless claims contributing to nervousness in the bond market. Traders are anticipating continued softness in the labor market and the possibility of rate cuts by the Federal Reserve.