Why did US Treasury prices fall despite global stock market gains?

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US Treasury Prices Declined Amidst Global Stock Market Gains Due to a Shift Towards Riskier Assets and Persistent Trade Concerns

US Treasury prices experienced a decline as investors favored riskier assets, a trend amplified by the United States shelving plans to impose tariffs on Mexico. This move, coupled with a trade and migration deal between the two nations, boosted emerging market stocks and increased US government bond yields. Despite broad gains in global equities, including US stocks, the upward momentum in riskier assets led to a sell-off in safe-haven assets like Treasuries.
Easing of US-Mexico Trade Tensions Fueled Risk Appetite

The decision by the United States to suspend planned tariffs on Mexico significantly eased immediate concerns about further global trade fragmentation. This development, alongside a bilateral trade and migration agreement, fostered a more optimistic sentiment among investors. Consequently, there was a discernible rotation from traditionally safe investments, such as US Treasuries, into assets perceived as carrying higher risk and potentially higher returns, such as equities and emerging market debt.
Shifting Focus to US-China Trade War and Economic Data Impacted Treasury Yields

While the resolution of the US-Mexico tariff dispute provided a temporary boost to risk assets, investor focus soon returned to the ongoing trade conflict between the United States and China. This persistent uncertainty, coupled with indications of slowing economic data, such as the weak May jobs report, began to temper the earlier optimism. The prospect of sustained economic headwinds and unresolved trade disputes typically leads investors to demand higher yields on government debt, thus pushing Treasury prices lower.
Higher Demand for Riskier Assets Drove Up Bond Yields

The prevailing market sentiment favored riskier investments, leading to increased demand for equities and other growth-oriented assets. As investors reallocated capital towards these riskier options, the demand for safe-haven assets like US Treasury notes diminished. This reduced demand, in turn, caused bond prices to fall, consequently driving yields higher. For instance, benchmark 10-year Treasury notes saw their price fall by 18/32, pushing their yield up to 2.1466 per cent from 2.084 per cent.

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Why did US Treasury prices fall despite global stock market gains?

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