BOND REPORT: Treasury Yields Climb On Signs Of Progress Towards U.S.-China Trade Deal
11 October 2019 - 1:04PM
Dow Jones News
By Sunny Oh
U.S. Treasury yields rose on Friday amid signs that the U.S. was
nearing a limited trade deal that could prevent a further
escalation of the tariff spat between the two world's largest
economies.
What are Treasurys doing?
The 10-year Treasury note yield was up by 2.1 basis points to
1.677%. The 2-year note rate rose 3.1 basis points to 1.561%, while
the 30-year bond yield edged higher by 1.4 basis points to
2.166%.
What's driving Treasurys?
Hopes that some progress would be reached towards easing
U.S.-China trade tensions comes as the Chinese delegation to
Washington wraps up its two-day visit
(https://www.reuters.com/article/us-usa-trade-china/day-1-of-u-s-china-trade-talks-end-with-hopes-for-limited-deal-idUSKBN1WP0H6).
President Donald Trump said the first day of negotiations had gone
"really well."
(http://www.marketwatch.com/story/us-china-trade-talks-are-going-very-well-trump-says-2019-10-10)
He said he would plan to meet Chinese Vice Premier Liu He on
Friday.
Analysts say both sides could strike a less expansive trade deal
that would halt the imposition of tariffs on Chinese imports next
week
(https://www.nytimes.com/2019/10/10/us/politics/us-china-trade.html).
U.S. and British bond-markets came under pressure after U.K.
Prime Minister Boris Johnson held talks with Ireland's head of
state Leo Varadkar, who said the meeting had been "very promising."
(http://www.marketwatch.com/story/brexit-hopes-fuel-fresh-rally-for-the-british-pound-2019-10-11)
Talks have been held back by lingering questions
(https://www.bbc.com/news/uk-politics-50007206) over how a border
between Ireland and Northern Ireland will be implemented when the
U.K. leaves the EU.
The 10-year yield for U.K. government bonds , or gilts, surged
9.2 basis points to 0.638%.
In economic data, investors will see a report on U.S. import and
export prices for September due at 8:30 a.m. Eastern Time, and a
reading on U.S. consumer sentiment due at 10 a.m.
Investors also will watch for comments from Boston Federal
Reserve President Eric Rosengren -- one of three dissenters in the
Fed's last decision -- set to speak at 1:15 p.m., while Dallas Fed
President Robert Kaplan is expected to moderate a panel in San
Francisco at 3 p.m.
What did market participants' say?
"Fixed income markets were already under pressure before the
news about the Trump-China meeting broke and before the
Johnson-Varadkar statement was published," wrote Peter Schaffrik,
global macro analyst at RBC Capital Markets.
"We assume that the market is still slightly biased to the long
side and with the risks of going into a weekend where there could
be genuine progress between [U.S.-China trade and Brexit
negotiations], running bond longs seems a daunting proposal," wrote
Schaffrik.
(END) Dow Jones Newswires
October 11, 2019 07:49 ET (11:49 GMT)
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