WASHINGTON (dpa-AFX) - Treasuries moved mostly higher during trading on Tuesday, largely offsetting the modest pullback seen in the previous session.
Short-term treasuries moved steadily higher for much of the day and were eventually joined in positive territory by ten-year notes. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.7 basis points to 4.258 percent.
Thirty-year bonds bucked the upward trend, however, with the thirty-year yield closing off its highs of the session but still up by 2.1 basis points at 4.909 percent.
The strength among short-term treasuries came as traders bet President Donald Trump's interference with the Federal Reserve will lead to lower interest rates in the near term.
In a letter posted on Truth Social on Monday, Trump said he is removing Fed Governor Lisa Cook from her position amid accusations she made false statements on one or more mortgage agreements.
However, Cook responded with a statement claiming Trump does not have the authority to fire her and said she will not resign.
'The President is going to remake the Board Governors of the Federal Reserve over the next year, and he's doing so in very unconventional ways--we've had a resignation and now a termination, opening the door to accelerate this change,' said Jamie Cox, Managing Partner for Harris Financial Group.
He added, 'Trump has essentially usurped the Fed's forward guidance function for the time being and telling markets lower rates are coming, which is being manifest in a steeper yield curve, with short term treasuries dropping like a rock.'
Traders were also reacting to Trump's latest tariff threats, with the president threatening to impose 'substantial additional tariffs' on countries that do not remove digital taxes and related regulations that harm U.S. tech companies.
'America, and American Technology Companies, are neither the 'piggy bank' nor the 'doormat' of the World any longer,' Trump said on Truth Social. 'Show respect to America and our amazing Tech Companies or, consider the consequences!'
On Monday, Trump threatened to impose 200 percent tariffs on China if Beijing does not export rare-earth magnets to the U.S.
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