All Eyes on Wednesday’s Tariff Rollout

Treasurys rally again to close out a volatile month. Treasury yields declined overnight after this weekend’s tariff news, which included “secondary tariff” threats from President Trump on Russia. The short end of the yield curve fell as low as -7 bps by 8 AM EST but then rose throughout the remainder of the session, closing just 1-3 bps lower. The 2-year yield is currently 3.88% after a 10 bp decline on the month and a 50 bp drop from YTD highs. Meanwhile, the long end of the curve fell 4-6 bps, and the 10-year yield (4.21%) was flat on the month but remained 60 bps below YTD highs.

Oil prices surge following Trump tariff threats on Russia. On a phone call with NBC News on Sunday, President Trump said that we was “very angry” after Russia President Putin criticized Ukraine President Zelenskyy and called for a “transitional administration” to be put in place in Ukraine. Trump stated, “If Russia and I are unable to make a deal… and if I think it was Russia’s fault… I am going to put secondary tariffs… on all oil coming out of Russia… if you buy oil from Russia, you can’t do business in the United States.” He specified that oil tariffs would be 25%-50%, and oil prices surged as a result; WTI crude rose 3.1% to $71.48 per barrel, its highest closing level since mid-February. Brent crude rose 1.51% to $74.74 per barrel.

President Trump throws cold water on softer tariffs. Today, President Trump said that on April 2nd, he will announce reciprocal tariffs on “all countries” in an apparent reversal from remarks last week that indicated the levies may be more measured. He said, “You’d start with all countries, so let’s see what happens…” Still, he followed by saying the U.S. will be “much nicer” on tariffs than other countries, possibly hinting that tariff rates may not be identical to those imposed on the U.S. Meanwhile, unlikely friendships appear to be forming between U.S. allies and enemies amid tariff speculation. Today, China, Japan and South Korea announced they will start high-level talks on a free trade agreement between the three nations, a rare area of cooperation among a group usually preoccupied with mutual diplomatic conflicts.