LIVE MARKETS-US Treasuries will follow stocks on April 2

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US TREASURIES WILL FOLLOW STOCKS ON APRIL 2

U.S. Treasury yields fell around 10 basis points in the first two days of this week, saddled by concerns about tariffs worsening an economic slowdown.

However, investors are uncertain about the possible market reaction to the U.S. announcement on duties as a trade war brings significant inflation risks, which could drive up policy rates and bond yields.

"As a one-day trade, we'll take our cue from the risk asset space, and in particular equity markets," ING strategists say.

"We don't love doing this as we think the bond market is 'smarter' and more long-term in thinking," they add.

"But if we go risk-off in a big way on the day, it's hard to see bond yields rising, as there would be a flight into bonds," and the reverse if risk assets take the news well.

The fallout over subsequent days will be determined by the details of what happens on Wednesday.

However, "it does feel that Treasury yields are in a mood to test lower still for a bit, trading off the growing recession risk being priced from a whole array of weak-leaning survey evidence, with tariffs acting as a tipping point," they say.

White House tariff announcement is due at 2000 GMT.

Yesterday's jump in the safe-haven yen started as equity index futures dropped in early U.S. trade and subsided when stocks picked up.

(Stefano Rebaudo)

EARLIER ON LIVE MARKETS:

TRUMP TARIFFS: WILL THE UK EARN A FREE PASS? CLICK HERE

HEALTHCARE LEADS EUROPE LOWER CLICK HERE

EUROPE BEFORE THE BELL: FUTURES DIP AHEAD OF LIBERATION DAY CLICK HERE

MORNING BID: MARKETS AT A STANDSTILL BEFORE TARIFF DRAMA CLICK HERE