Bond Report: Treasury yields extend slide as softening Asian data and trade uncertainty weigh on sentiment
U.S. Treasury yields slipped on Thursday as investors eyed weakening economic data in Asia, along with geopolitical jitters and uncertainty around a phase one trade deal.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -2.47% fell 3 basis points to 1.839%, down from 1.930% at the end of last Friday, while the 30-year bond rate TMUBMUSD30Y, -1.91% was down 3.4 basis points to 2.315%. The 2-year note yield TMUBMUSD02Y, -0.99% edged 1.4 basis points lower to 1.614%.
What’s driving Treasurys?
The Commerce Ministry said the U.S. and China were holding “in-depth” discussion on the partial trade agreement, emphasizing that the cancellation of tariffs was important to concluding a deal. On Wednesday news reports said negotiations had run into difficulties over China’s pledge to buy up farm goods, with Beijing unwilling to commit to a specific amount.
China’s economy is also showing fresh signs of weakness even as inflation continues to tick higher–a conundrum for policy makers as the trade dispute with the U.S. drags on. Readings of economic growth slowed further in October, government data showed on Thursday, with disappointing numbers in industrial output, household consumption and fixed-asset investment.
Geopolitical jitters around Hong Kong protests continued to simmer in the background too. A state-backed Chinese newspaper issued a tweet saying the Hong Kong government was expected to announce a curfew on the weekend, but later retracted the comment after its editor there was not “sufficient information” to support the assertion.
In U.S. economic data, jobless claims, wholesale prices for October are due for release at 8:30 a.m. ET.
Thursday’s docket is packed with speakers from the Federal Reserve, including Fed Vice Chairman Richard Clarida and Fed Chairman Jerome Powell who will testify in front of Congress for the second day in a row.
What did market participants’ say?
“Treasury prices firmed overnight on the back of more fallout on Hong Kong curfew confusion and weaker economic data from Japan and China,” wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.