(Bloomberg) -- US Treasuries fell for a second day as investors trimmed exposure to haven assets on optimism that the US will reach more trade deals after clinching a pact with Japan.

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The 10-year Treasury yield traded 2 basis points higher at 4.40%. The two-year yield rose 1 basis point, to 3.89%. Investors await a fresh dose of supply from an auction of 10-year inflation-indexed notes later.

Deals between the US and its trading partners before Aug. 1 are spurring risk-on moves in markets, leading investors to shun the safety of government debt. The European Union and the US are progressing toward an agreement that would set a 15% tariff for most imports, according to diplomats briefed on the negotiations.

Another pressure point for Treasury traders is a dispute between President Donald Trump and Federal Reserve Chair Jerome Powell over construction works, which the president has criticized for cost overruns. In recent days, Trump has said that he didn’t plan to fire Powell before the end of his term, but hasn’t fully closed the door over removing the central bank head over his handling of the Fed’s $2.5 billion renovation project.

“The mounting risk of the Fed being seen as acting more on a political than a fundamental level is a sizable threat to long-end rates over the medium term,” Rabobank strategists wrote in a note.

Powell has resisted escalating pressure from the White House to cut interest rates. Slowing growth as a result of tariffs could bolster the case for lower rates, said Mohit Kumar, chief European strategist at Jefferies International.

“Our bias would be for rates to head lower in August, as we expect the employment data to slow over the coming months,” Kumar wrote in a note.

Data on initial jobless claims and manufacturing activity are due later.

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