US Treasury prices pared early gains after having shot higher Friday following a stampede to safety overnight after the US threatened to slap tariffs on Mexican goods. The latest kerfuffle adds to an already tense trade situation between the US and China, an array of European woes and weakening global data.

The 2-year had a commanding lead on the rally while the long bond dragged. The 2- and 5-years busted through the psychologically-significant 2% point with relative ease with traders reporting a rout of weak stop-loss orders. Prices were boosted deeper into 2017 territory with the 10-years threatening the key 2.15% level, which it breached briefly overnight.

The latest push to deeper inversion on the 3-month to 10-year yield spread continued to spark concerns over growth ahead adding support to rallying bonds.

The session’s run of mixed domestic data was overshadowed by the ongoing trade disputes. The tariff threat against Mexico spurred JPMogan to pencil in two 25 basis point rate cuts out of the Federal Reserve by year-end, and “much more” if there is any follow through on the threatened 25% levy rate.

The 30-year yield was near 2.597% versus a 2.595% opening low, 2.616% high and 2.653% close Thursday, having tested the 2.59% point overnight. The 10-year yield was near 2.164% against a 2.159% opening low, 2.183% high and 2.225% close. The 5-year yield was near 1.962% versus a 1.958% low, 1.986% high and 2.031% close Thursday. The 2-year yield was near 1.99% from a 1.996% low, 2.015% high and 2.073% close.

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The curve trade was steepened with the 2-and 10-year yield spread blown out to 17.4 from 15.3 Thursday while the 5-and 30-year yield differential was near 63.5 from 62.2.

CME Group fed fund futures upped the odds of an at least 25 bp rate cut by the Dec. 11 Federal Open Market Committee meeting, running near 89.8% from 84.2% Thursday and 66% April 30. The market probability of a 50 bp easing was near 35.5% against 19.7% a month ago.

Fed speakers took a backseat to the market action with New York President John Williams speaking on rate research on the zero-lower bound (ZLB), saying the lessons were “that short-term rates should be cut aggressively when deflation or a severe downturn threatens.” He also said that Feds should “not ‘keep your powder dry.'” He said that short-term rates should also be “kept ‘lower for longer’ as the economy recovers,” and “that large-scale asset purchases (LSAPs) can complement conventional policy actions by making financial conditions more favorable for growth even when short rates” are constrained by the ZLP.

The final May University of Michigan consumer sentiment headline missed at 100 versus the 101.5 expected and 102.4 preliminary print.

The May Chicago Purchasing Managers’ Index rose to 54.2 versus the 53.6 forecast, after tumbling to 52.6 in April.

April personal income and spending both beat, up 0.5% and 0.3% against expectations for respective 0.3% and 0.2% reads.