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Treasuries Move Notably Lower Amid Easing Trade Concerns

Reflecting easing trade concerns, treasuries showed a notable move to the downside over the course of the trading session on Monday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 2.143 percent.

The weakness among treasuries came in reaction to news the U.S. and Mexico have reached an agreement to avert President Donald Trump's threatened tariffs on all Mexican imports.

Trump revealed in a post on Twitter late Friday that the 5 percent tariff he threatened to impose on Mexican imports beginning today has been "indefinitely suspended."

The suspension of the tariff threat comes as the two countries signed a deal Trump claims will help stop the flow of migrants through Mexico and into the U.S.

Details of the deal announced by the State Department indicated Mexico will take unprecedented steps to increase enforcement to curb irregular migration, including deploying 6,000 troops from its newly formed National Guard to its southern border.

However, some analysts have questioned the impact of the steps being taken by Mexico, arguing Trump threatened to derail a key economic partnership for a deal that ultimately maintains the status quo.

Trump also warned on Twitter this morning that the tariffs will be reinstated if Mexico's legislative body does not approve an unrevealed but "very important" part of the deal.

The president also indicated in an interview with CNBC that he would continue to use tariffs to advance American interests in trade talks with China.

Trump argued that existing tariffs on Chinese imports will force China to make a deal and threatened to impose more tariffs if Chinese President Xi Jinping does not attend a planned meeting at the G-20 summit later this month.

News on the trade front is likely to remain in the spotlight on Tuesday, although trading could also be impacted by reaction to a report on wholesale inflation.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of $38 billion worth of three-year notes.

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