10-year Treasury yield falls to 1.53% after trade deficit data

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Treasury yields fell on Tuesday after showed U.S. trade deficit narrowed slightly from record levels as Covid-era demand for imports let up.

The yield on the benchmark 10-year Treasury note dropped 4 basis points to 1.53%, while the yield on the 30-year Treasury bond also fell 4 basis points to 2.209%. Yields move inversely to prices.

The goods and services deficit was $68.9 billion in April, down $6.1 billion from $75 billion in March, the the highest level for a data series that stretches back to January 1992., U.S. Census Bureau and the U.S. Bureau of Economic Analysis said Tuesday.

The dollar weakened slightly against the Japanese yen Tuesday to 109.26 yen as markets expect a higher inflation print. The greenback’s easing comes after hitting a two-month high of 110.325 to the yen last week.

Investor focus is on new inflation signals later this week following Friday’s jobs report. The U.S. added fewer jobs than expected in May, but the unemployment rate dropped to 5.8% from 6.1% and markets reacted positively.

May’s NFIB Small Business Optimism Index will be released Tuesday. The index, published by the National Federation of Independent Business, gauges the health of America’s small businesses, which make up about 50% of the country’s private-sector workforce. The index’s reading in April, at 99.8, was the highest level since December though still below the pre-pandemic average.

In politics, several leading U.S. Senate Republicans on Monday rejected Treasury Secretary Janet Yellen’s recently agreed G-7 deal to levy a global minimum tax on corporations, casting a shadow over the possibility of achieving a wider deal with more countries.

Stock picks and investing trends from CNBC Pro:

Democrats on Wednesday will begin preparing an infrastructure bill for a vote in the House, with or without Republican backing. President Joe Biden will once again discuss the possibilities for a deal with Republican leaders this week after rejecting the GOP’s latest bill offer for a $928 billion spending package on Friday. Biden’s most recent spending proposal came in at $1.7 trillion.

Auctions for 3-year Treasury notes and 42-day bills are due Tuesday.