U.S. government debt prices were lower Tuesday morning, amid concerns an ongoing trade dispute between the world’s two largest economies could be extended and more economically damaging.
At around 02:05 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 2.1020%, while the yield on the 30-year Treasury bond was also higher at around 2.5577%.
Bond pros say the widely-watched 10-year yield could easily dip to 2% or below, after it touched 2.06% Monday, and J.P. Morgan Chase strategists say their target is now 1.75% for year end.
That forecast came as a number of Wall Street firms, including J.P. Morgan and Barclays switched their view to two Fed rate cuts this year, from none previously.
For context, the 10-year yield was at 2.55% at the beginning of May, and at the beginning of the year, many strategists believed the Fed would be raising interest rates this year, and the 10-year would be above 3%.
Comments from the Federal Reserve on Monday raised expectations that the U.S. central bank is moving closer to a rate cut.
St. Louis Federal Reserve president James Bullard said a U.S. interest rate cut “may be warranted soon ” given the rising risk to economic growth posed by global trade tensions as well as weak U.S. inflation.
On the data front, factory orders for April will be expected at around 10:00 a.m. ET.
There are no major Treasury bond auctions scheduled on Tuesday.
— CNBC’s Patti Domm contributed to this report.