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U.S. Treasury yields ticked higher on Friday after reports that U.S.-China trade negotiations were on track, boosting hopes that both sides were moving again towards a lasting resolution to their longstanding trade dispute.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, +1.43% rose 3.1 basis points to 1.716%, while the 2-year note rate TMUBMUSD02Y, +1.00% was up 2.3 basis points to 1.677%. The 30-year bond yield TMUBMUSD30Y, +1.00% climbed 3.5 basis points to 2.163%.
What’s driving Treasurys?
The softer tone in the bond-market tracked the rebound in equities after CNBC reported that top negotiators were set to meet in Oct. 10-11 in Washington, with the Chinese delegation led by Chinese Vice Premier Liu He. News reports also added that Chinese officials were considering more purchases of U.S. goods.
Futures for the S&P 500 ESZ19, +0.33% and the Dow Jones Industrial Average YMZ19, +0.26% pointed to a higher open for Wall Street.
Investors will look forward to a raft of U.S. economic data in the morning. Data on August durable goods orders is due at 8:30 a.m. Eastern, with economists surveyed by MarketWatch looking for a 0.7% drop. Separately, August data on personal income and spending is also scheduled for 8:30 a.m., with economists looking for a 0.5% rise in income, a 0.3% increase in spending, and a 0.1% rise in core inflation.
The University of Michigan September consumer-sentiment index reading is due at 10 a.m. Eastern.
As for the Federal Reserve, Randal Quarles, the Fed’s vice chairman for banking supervision is set to speak at 8:30 a.m., followed by Philadelphia Fed President Patrick Harker at noon.
What did market participants’ say?
“Our base case remains that the consumer will prove strong enough to prevent anything beyond a “mid cycle” adjustment by the Fed with only one more cut (25 bp) expected this year (with a 160k payroll gain expected next week). However, futures markets are more pessimistic on this score and one reason may be the limited scope for any easing in fiscal policy,” wrote Mark Chandler, a rates strategist at RBC Capital Markets, referring to the coming raft of data.
