US 10Y TREASURY: the Bad, the Good and Tariffs

At the first look at the 10Y US benchmark chart, one might say that it looks pretty scary as of the end of last week. However, historically, it happens. Trade tariff war has started, which triggered a massive market uncertainty and a sell-off on financial markets. Naturally, the first idea in investors' perspectives for the future period is a recession on a world's scale and in the US and this was reflected in the US yields. It started at the beginning of the week, where yields from the 4,35% took the down course for the rest of the week, ending it with the 3,86% at the Fridays trading session. However, after reaching the lowest level, the yields reverted just a bit to end the week at the level of 3,99%. The strong move was also supported by Fed Chair Powell's comment that a trade war will have a negative effect on the US economy, which cannot be estimated at this moment.

The volatility of markets might continue for another week in a row. Markets will cope with estimation of countermeasures, which are slowly announced by other countries. Based on current probabilities there are equal chances that the market will test the 4,0% level, or it might move once again down, to test levels below the 4%.