U.S. government debt prices were lower Tuesday morning, as investors flocked to safer assets amid rapidly intensifying tensions between the world’s two largest economies.

U.S. Markets Overview: Treasurys chart

At around 02:50 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 1.7496%, while the yield on the 30-year Treasury bond was also higher at around 2.3020%.

It comes after the U.S. 10-year Treasury yield, which influences mortgages and other loans, fell to 1.735% in the previous session — its lowest level since November 2016.

The U.S. Treasury officially designated China as a “currency manipulator” on Monday, following a sharp fall in the value of the Chinese yuan against the dollar.

The drop surprised financial markets, as Beijing usually supports the currency.

Late last week, China vowed to retaliate after President Donald Trump threatened to impose a 10% tariff on $300 billion worth of Chinese imports.

On Monday, the yuan breached the 7 per dollar level for the first time since 2008.

A protracted trade dispute between the U.S. and China has now dragged on for more than a year. Both countries have slapped additional tariffs on each other’s goods worth billions of dollars, and the escalating tensions have spooked markets and hurt global economic growth outlook.

On the data front, the latest monthly Job Openings and Labor Turnover Survey (JOLTS) will be released at around 10 a.m. ET.

Meanwhile, the U.S. Treasury is set to auction $38 billion in 3-year notes on Tuesday.

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