This post was originally published on this site
U.S. Treasury yields fell sharply on Thursday after a news report said that Chinese government officials were unsure if a longer-term comprehensive trade deal with the U.S. can be reached.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -2.12% was down 5.8 basis points to 1.738%, while the 2-year note rate TMUBMUSD02Y, -0.49% was down 4.6 basis points to 1.584%. The 30-year bond yield TMUBMUSD30Y, -2.02% slipped 5.9 basis points to 2.213%.
What’s driving Treasurys?
Investors sought shelter in haven assets after Chinese officials questioned the likelihood of a long-term comprehensive deal that would address sticking points such as Chinese industrial policy, according to Bloomberg. Reuters also reported that Beijing could remove additional tariffs on U.S. farm products to make it easier for Chinese importers to buy soybeans.
This comes after Chile canceled the Asia-Pacific Economic Cooperation summit in mid-November amid continued unrest in that country, where President Donald Trump and China’s Xi Jinping were planning to sign the so-called phase one trade deal. China’s Commerce Ministry said both U.S. and Chinese trade delegations will hold a phone call on Friday.
Futures for the S&P 500 SPX, +0.33% indicate a lower open for Wall Street on Thursday, after the large-cap benchmark closed at a record on Wednesday.
The Federal Reserve cut interest rates for the third time this week on Wednesday, but Fed Chairman Jerome Powell also indicated the central bank may not shift rates lower unless a “material” deterioration of economic outlook took place.
See: Fed cuts rates for third meeting in a row, signals pause
Analysts on Thursday will sift through data that could give clues on inflationary pressures and household finances.
September readings for personal income, consumer spending and personal consumption expenditure price index are all due at 8:30 a.m. ET. Weekly jobless claims and the third-quarter employment cost index will be issued at the same time. Then, October’s Chicago purchasing managers index will be released at 9:45 a.m.
What did market participants’ say?
“[Treasury prices] firmed after China announced they doubt any deal with President Trump will be long-term,” said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.
