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Trump broadens trade war with more tariffs

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Treasury sees soft demand for $58 bln 3-year auction

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Global bond selloff pulls US yields higher

(Updated in New York afternoon time)

By Karen Brettell

July 8 (Reuters) - U.S. Treasury yields rose on Tuesday

as President Donald Trump announced more tariffs and before the

Treasury will auction 10-year and 30-year debt in the coming

days.

Trump on Monday told 14 nations, from powerhouse suppliers

such as Japan and South Korea to minor trade players, that they

will face sharply higher tariffs from a new deadline of August

1.

He also broadened his global trade war on Tuesday as he

announced a 50% tariff on

imported copper

and said long-threatened levies on semiconductors and

pharmaceuticals were coming soon.

Investors are concerned that higher tariffs will increase

inflation and slow economic growth, though so far price

pressures have remained relatively contained.

The U.S. Congress also last week passed the Trump-backed

"Big Beautiful Bill," which will add trillions of debt over the

coming decade and raises the debt ceiling by $5 trillion.

"There's plenty of concern about what the one 'Big Beautiful

Bill' means and if tariffs are going to produce inflation that

we really haven't seen yet," said Zachary Griffiths, head of IG

and macro strategy at CreditSights in Charlotte, North Carolina.

"A lot is going to hinge on this CPI print."

The U.S. Labor Department is due to release the Consumer

Price Index for June on July 15.

The Treasury saw soft demand for a $58 billion auction of

three-year notes on Tuesday. The debt sold at a high yield of

3.891%, around half a basis points above where it traded before

the sale. Demand was below average at 2.51 times the amount of

debt on offer.

The Treasury will sell $39 billion in 10-year notes on

Wednesday and $22 billion in 30-year bonds on Thursday.

Longer-dated yields have risen more than shorter-dated ones this

week, which may help boost interest in the upcoming auctions.

"To the extent we've seen the curve steepen over the past

couple of days, maybe that adds to the likelihood of a decent

bid for tens and thirties," Griffiths said.

Demand for longer-dated debt may also be supported after

Treasury Secretary Scott Bessent last week said he does not plan

to increase the auction sizes of the debt at current interest

rates.

The yield on benchmark U.S. 10-year notes was last

up 2.2 basis points on the day at 4.417% and reached 4.435%, the

highest level since June 20.

The 30-year bond yield rose 1.7 basis points to

4.947% and reached 4.974%, the highest level since June 9.

The interest rate sensitive 2-year note yield rose

half a basis point to 3.909% and got as high as 3.92%, the

highest level since June 23.

The yield curve between two-year and 10-year notes steepened by

around two basis points to 51 basis points.

A global bond selloff including Japanese and German bonds helped

to pull U.S. yields higher on Tuesday.

Yields have also increased this week after a

stronger-than-expected jobs report for June on Thursday led

traders to pare bets on how many times the Federal Reserve is

likely to cut rates this year.

The Treasury said on Tuesday that it will increase its issuance

of 4-, 6- and 8-week Treasury bills as it rebuilds its cash

balance after the increase in the debt ceiling.