After recovering from an initial move to the downside, treasuries showed a lack of direction over the course of the trading session on Monday.
Bond prices spent much of the day bouncing back and forth across the unchanged line before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 3.001 percent.
While the ten-year yield ended the day only slightly higher, this marks the first close above 3 percent in well over a month.
The choppy trading in the bond market came amid lingering trade concerns amid reports President Donald Trump intends to proceed with plans to impose tariffs on $200 billion worth of Chinese goods as early as today.
A report from the Wall Street Journal said the new tariffs would bet set at 10 percent, lower than the 25 percent previously floated by the administration.
The threat of new tariffs could still lead China to decline an offer to hold high-level trade talks, as the country is not prepared to negotiate with a “gun pointed to its head,” the Journal noted.
In a post on Twitter this morning, Trump claimed tariffs have put the U.S. in a very strong bargaining position and called subsequent cost increases “almost unnoticeable.”
China has pledged to retaliate to any new tariffs imposed by the U.S., with reports suggesting the communist country could go beyond raising tariffs on U.S. imports and restrict exports of goods critical to U.S. manufacturing.
On the U.S. economic front, the New York Federal Reserve released a report showing a bigger than expected slowdown in the pace of growth in regional manufacturing activity in the month of September.
The New York Fed said its general business conditions index fell to 19.0 in September from 25.6 in August, although a positive reading continues to indicate growth in regional manufacturing activity. The index had been expected to dip to 23.0.
Any developments regarding U.S. tariffs on Chinese goods may impact the markets on Tuesday along with a report on homebuilder confidence in the month of September.