Treasury yields were on track for their first daily decline in a week, as investors increased their bets on a US recession despite news of tariff exemptions.

The 10-year Treasury yield, which sets government borrowing rates and underpins pricing on financial assets worldwide, fell 0.13 percentage points on Monday to 4.36 per cent. That puts the 10-year on track to record its first day of declines in yield, which move inversely to price, since April 4. Across maturities, yields were lower. 

The 10-year Treasury yield is sensitive to growth expectations — it tends to fall when investors are betting on increased chances of a recession. 

Mohit Mittal, chief investment officer of core strategies at bond fund group Pimco, said: “Even with the 90-day pause, even with the weekend pause on tech products, this has created an environment of extreme uncertainty. Until we get more certainty, businesses and consumers will continue to act with caution. That brings us closer to a recession in 2025. That’s the fundamental story for the bond market.” 

Treasuries typically move inversely to shares — when stocks rise, bond prices fall and yields rise. But that relationship has been subverted in the past week, as investors sold both stocks and bonds. On Monday, investors were buying both, which could be seen as a “buy the dip” move — in stocks and in bonds. 

Mittal said: “Government bonds look very attractive here. This is starting to create attractive opportunities for long-term investors. If you expect US growth to decline further, then yields could be much lower going forward.”