Benchmark 10-year U.S. Treasury yields fell for the sixth consecutive day to a three-week low on Tuesday after data showed that U.S. job openings dropped sharply in March while consumer confidence hit an almost five-year low.

Job openings, a measure of labor demand, decreased 288,000 to 7.192 million by the last day of March though a decline in layoffs suggested that the labor market remained on solid footing.

U.S. consumer confidence slumped in April as growing concerns over tariffs weighed on the economic outlook. “The data just generally is getting weaker,” said Tom di Galoma, managing director at Mischler Financial Group. “That's one of the main reasons why the markets are pointing towards lower rates.”

Investors are focused on data releases this week that will culminate in Friday’s jobs report for April for signs that the economy is slowing, which could boost bets that the Federal Reserve is closer to cutting rates.

Fed funds futures traders are pricing in 61% odds of an interest rate cut by June, according to the CME Group’s FedWatch Tool. Fed officials are in a blackout period ahead of the May 6-7 meeting, when traders see only a 7% chance of a rate cut.

Falling commodity prices, including oil, may also make it more likely that the U.S. central bank is closer to cutting rates. “Oil is dropping and commodities just generally seem to be dropping and I think that that's a favorable outlook for inflation,” said di Galoma.

The yield on benchmark U.S. 10-year notes was last down 3.5 basis points at 4.181%, the lowest since April 8.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 2.5 basis points to 3.66% and reached 3.656%, the lowest since April 7.

The yield curve between two-year and 10-year notes steepened by around a basis point to 52.5 basis points.

Market participants remain nervous about the impact of tariffs, though the market has stabilized from a sharp selloff earlier this month after Trump announced larger than expected levies on trading partners.

Most of these increases have been delayed until July 9 and investors are hopeful that the U.S. will reach trade deals before the pause period lapses.

President Donald Trump's administration will move to reduce the impact of his automotive tariffs on Tuesday by alleviating some duties imposed on foreign parts in domestically manufactured cars and keeping tariffs on cars made abroad from piling on top of other ones, officials said on Monday.

The Treasury is expected to keep auction sizes steady when it announces its refunding plans for the coming quarter on Wednesday. Traders will focus on any guidance about future auction size increases.

 

(Reporting By Karen Brettell Editing by Tomasz Janowski)