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Treasury prices edged higher Friday, dragging down yields, as global equity markets tip lower following earnings from a pair of big tech companies and President Donald Trump’s threat to impose tariffs on China over its handling of the COVID-19 pandemic.
What are yields doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.618% was off 1 basis point at 0.61%, while the 2-year note yield TMUBMUSD02Y, 0.191% edged up 0.8 basis point to 0.188%. The 30-year Treasury bond yield TMUBMUSD30Y, 1.275% declined 2.1 basis points to 1.258%. Yields and debt prices move in opposite directions.
What’s driving the market?
Treasurys appeared to find a modicum of haven-related support as global equities edged lower following earnings reports late Thursday from Apple Inc. AAPL, +2.11% and Amazon.com Inc. AMZN, +4.26%. Shares of both were trading lower in premarket action, with weakness in Apple attributed to the iPhone maker’s decision not to provide guidance on the quarter ahead, while Amazon warned it could lose money as it ramps up spending.
On top of that President Donald Trump indicated he was weighing tariffs on China, citing Beijing’s handling of the pandemic.
What are analysts saying?
“The renewed trade tensions along with guidance from Amazon and Apple have weighed on the near-term outlook and the extent to which the shift in sentiment extends will be of particular note as the weekend swiftly approaches,” said Ian Lyngen, analyst at BMO Capital Markets, in a note.
“We maintain that with the coronavirus curve flattened and reopenings on the horizon, the balance of headline risks over the weekend have been skewed toward positive/risk-friendly, although there is little question the passage of month-end has altered the tone, at least on the margin,” he said.
