U.S. government debt prices jumped on Tuesday, as concerns over a potential trade war between the U.S. and China intensified.
The yield on the benchmark 10-year Treasury note was sharply lower at around 2.867 percent at 5:20 a.m. ET, while the yield on the 30-year Treasury bond was deep in the red at 3.000 percent. Bond yields move inversely to prices.
Markets around the globe are struggling to find any positive news as fears of escalating tensions over trade rattle sentiment.
Market-watchers have become increasingly jittery after President Donald Trump requested the United States Trade Representative identify $200 billion worth of Chinese goods for additional tariffs, at a rate of 10 percent.
If China "refuses to change its practices" and insists on continuing with the fresh tariffs it recently declared, then the additional levies would be imposed on Beijing, Trump stated Monday night.
The additional tariffs came hot on the heels of recent levies announced by both countries last week. Beijing has again reacted to Trump's statement, pledging to retaliate against the U.S. The Chinese Commerce Ministry stated that the fresh threat of more tariffs violates previous negotiations and consensus reached between the U.S. and China.
"The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," the Commerce Ministry said.
Consequently, trade is expected to remain the topic of the day, despite more economic data and central banking news due.
At 8:30 a.m. ET, housing starts and building permits are set to be published; and the U.S. Treasury is set to auction $26 billion in 52-week bills and $35 billion in four-week bills.
On the central banking front, St. Louis Fed President James Bullard is expected to attend the 2018 ECB Forum on Central Banking in Sintra, Portugal. Bullard's speech comes just before Fed Chair Jerome Powell is scheduled to participate in a panel discussion with other leading central bankers on Wednesday.
—CNBC's Nyshka Chandran and Huileng Tan contributed to this report