Treasury prices rose Friday, with yields ending lower, after Chinese state media suggested a resumption in trade negotiations may not take place as soon as anticipated.
As an early stock-market selloff ebbed, waning appetite for government paper has helped to lift bond yields from session lows.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, +0.07% fell 1.1 basis points to 2.396%, bouncing off an intraday low of 2.364%. The benchmark yield slipped 5.9 basis points this week.
The 2-year note yield TMUBMUSD02Y, +0.37% was virtually unchanged at 2.205%, keeping intact a 4.7 basis point decline for the week. The 30-year bond yield TMUBMUSD30Y, -0.15% was down 1.5 basis points to 2.825%, extending their weekly drop to 4.8 basis points. Debt prices move in the opposite direction of yields.
What’s driving Treasurys?
Commentary by the blog Taoran Notes, associated with the state-run Economic Daily newspaper, said unless the U.S. was sincere, it didn’t make sense for Chinese officials to come to Washington to resume trade talks, a sign that Beijing’s window to negotiate a trade deal may have narrowed.
China’s Commerce Ministry said it didn’t know of Treasury Secretary Steven Mnuchin’s planned visit, following his announcement on Wednesday that he would likely fly to Beijing soon to continue negotiations.
The escalation of Beijing’s rhetoric dampened appetite for equities and boosted haven assets. The S&P 500 SPX, -0.58% and the Dow Jones Industrial Average DJIA, -0.38% snapped their three day winning streak. China’s CSI 300 index 000300, -2.54% lost 2.5% on Friday, FactSet data show.
The bond-market pared some of its gains after a round of solid economic data in the morning. The University of Michigan’s consumer sentiment index for May rose to a fifteen-year high of 102.4, from 97.2, while the Conference Board’s leading economic indicators for April rose 0.2%.
What did market participants say?
“There has been a hardening in the stance of both Washington and Beijing as economic data in both countries has picked up” in the first-quarter, Anthony Kettle, senior portfolio manager at BlueBay Asset Management, told MarketWatch.
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