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BOND REPORT: Treasury Yields Rise As Trade Negotiations Get Under Way

11/02/2019 1:31pm

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By Sunny Oh

Investors may face another government shutdown on Feb. 15

Treasury prices were slightly lower Monday, nudging yields higher, as a U.S. delegation arrived in China to negotiate a trade accord.

The 10-year Treasury note yield was up 1.6 basis points to 2.648%, while the 2-year note yield rose a single basis point to 2.473%. The 30-year bond yield picked up a basis point to 2.985%. Bond prices move inversely to yields.

Opinion: Fed could pause rate hikes for as long as Treasury yield curve stays flat (http://www.marketwatch.com/story/fed-rate-hike-pause-could-continue-as-long-as-treasury-yield-curve-stays-flat-2019-02-11)

Tariff talks between the U.S. and China have started in Beijing with a round of low-level talks taking place on Monday. After which, U.S. Treasury Secretary and Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and China's Vice Premier Liu He will meet later at Feb. 14-15.

Axios reported (http://www.marketwatch.com/story/white-house-discussing-possible-trade-summit-with-china-at-mar-a-lago-report-2019-02-10)on Sunday that the White House was looking at President Donald Trump's Florida golf club, Mar-a-Lago, as the venue for a summit with Chinese leader Xi Jinping to end the trade war. Last week, Trump said he didn't expect to meet with Xi before a 90-day trade truce ends on March 1.

"There will be important events this week connected to two of the key global uncertainties: high-level trade talks between the US and China in Beijing and UK-EU talks in Brussels. But neither looks set to produce a breakthrough, prolonging the uncertainty. U.S.-China trade talks could, however, produce some progress as the 1 March deadline approaches," wrote analysts at Société Générale.

See: U.S. stock futures set for higher start as trade talks kick off, China equities (http://www.marketwatch.com/story/us-stock-futures-set-for-higher-start-as-trade-talks-kick-off-china-equities-rise-2019-02-11)rise (http://www.marketwatch.com/story/us-stock-futures-set-for-higher-start-as-trade-talks-kick-off-china-equities-rise-2019-02-11)

Investors relieved from the resumption of trade talks trickled into equities even as appetite for Treasurys were muted, pushing yields higher. Futures for the Dow Jones Industrial Average and the Nasdaq Composite were trading higher, while China's Shanghai Composite Index ended higher by 1.4%.

The U.K. economy grew 1.3% in 2018, its slowest annual pace in six years, amid softening factory activity and lower car production. The report comes as the U.K. seeks to secure a Brexit deal before its leave the ranks of the European Union at March 29. The U.K. 10-year government bond yield rose 2.1 basis points to 1.170%, Tradeweb data show.

Congressional Democrats and Republicans struggled to make headway on negotiations to stave off another government shutdown at Feb. 15 (http://www.marketwatch.com/story/border-security-negotiations-stall-as-another-shutdown-deadline-looms-2019-02-10). If the government shutters at the end of the week, analysts say it could draw concerns over the coming debt ceiling.

 

(END) Dow Jones Newswires

February 11, 2019 08:16 ET (13:16 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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