To begin with, it was a huge week for major economic announcements. On Monday, Treasury yields lost ground as Canada backed off on a proposed tax and the United States and China reached an agreement in principle on a trade framework. The benchmark 10-year Treasury yield fell by 3 basis points, closing at 4.253%. In contrast, the 30-year yield dropped by an equal 3 bps to 4.811%. The 2-year yield fell by 1 bp, closing at 3.727%.
Late Sunday night, Canada announced its plan to repeal the tax. He contended that intent for win-win, holistic, comprehensive trade deals was the impetus behind this shift. This expansion follows a week of remarkable actions and events. As the U.S. and China wrapped up equally consequential trade negotiations of their own, the future of U.S.-China economic relations may be turning a corner.
President Trump’s proposed spending package — his “big, beautiful bill” — cleared a critical procedural hurdle in the Senate on Saturday. This victory is a big boost to his domestic agenda. The proposed legislation would add well over $3.9 trillion to the national debt, alarming fiscal hawks on both sides of the aisle. Trump is personally pushing Congress to pass the bill before the scheduled upcoming Independence Day recess on July 4.
Indeed, earlier this week, Trump announced that he would be terminating all trade negotiations with Canada. He cited the administration’s tough approach on trade matters as justification for the current negotiations.
The Senate is preparing for one last big fight over Trump’s short-term spending bill. This legislation has already ignited a big debate among lawmakers. Five important economic indicators are primed to take their turn in the spotlight this week. Tuesday will bring the ISM Manufacturing PMI and JOLTs job openings report, with non-farm payroll data slated for release on Thursday.
Market analysts point to an inverse relationship between yields and prices that often creates jitters of investor sentiment. These trends are indicative of a wait-and-see approach as economic actors wait for more clarity from upcoming reports and legislative developments.