“The market is trying to bounce here, but we have yields climbing and that could dampen enthusiasm,” said Peter Cardillo, chief market economist at First Standard Financial.
Investors have been on edge as of late over concerns surrounding higher interest rates, therefore moves in the bond market will continue to be of key importance going forward. The benchmark 10-year U.S. note yield rose to a four-year high on Monday before trading at 2.851 percent.
The latest move higher follows news that the White House will unveil a long-awaited infrastructure plan that includes $200 billion in federal infrastructure spending over 10 years.
“It is no surprise that Trump’s agenda will provide a great deal of fiscal stimulus from tax cuts, and more spending on defense and infrastructure,” said Ed Yardeni, president and chief investment strategist at Yardeni Research. “The jury is still out on whether all that fiscal stimulus will revive inflation. [We] don’t think so, but the Bond Vigilantes are saddling up.” He also said his firm raised its 2018 forecast on the 10-year yield to a range of 3-to-3.5 percent.
Elsewhere, oil prices posted sharp gains during the first day of the trading week, as markets regained some of their footing across the globe. U.S crude was trading around $59.86 at 11:13 a.m. ET, while Brent futures hovered around $63.30.
There were no major economic data releases on Monday, but investors looked ahead to the release of the latest Consumer Price Index reading. The CPI numbers are scheduled for release Wednesday at 8:30 a.m. ET.
Jonathan Golub, chief U.S. equity strategist at Credit Suisse, told CNBC’s “Squawk on the Street” the CPI number was important. “The expectations are that inflation is actually going to be coming down a tiny bit, both on the core and the headline,” he said. “Unless we get a problematic surprise, I think Wednesday can actually be the event that calms the markets down.”