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Treasury yields retreated on Friday, extending their slide for the week, as investors digested a sharp slump in U.S. retail sales and growing U.S.-China tensions.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.626% fell 1.3 basis points to 0.606%. The 2-year note yield TMUBMUSD02Y, 0.145% edged 0.2 basis point lower to 0.147%. The 30-year bond yield TMUBMUSD30Y, 1.292% slipped 2.4 basis points to 1.272%.
What’s driving Treasurys?
Haven assets benefited from reports that the U.S. was moving to bar shipments of semiconductors to Huawei Technologies Co., the Chinese telecoms giant. Global Times editor Hu Xijin, who is perceived to have close ties to the Chinese government, said China may retaliate if the U.S. prevents microchip shipments to Huawei.
Futures for the S&P 500 index SPX, -0.43% and Dow Jones Industrial Average DJIA, -0.36% were trading lower after the report.
The bond-market rally also gained momentum amid confirmation that the engine of the U.S. economy — consumer spending — had come to a halt.
Retail sales fell 16.4% in April, marking its biggest slump on record, as coronavirus-related lockdowns shuttered swathes of the economy. Economists polled by MarketWatch had, on average, expected a 12.5% plunge.
Meanwhile, the Empire State business conditions index showed factory activity in New York State slumped to a reading of negative 48.5 this month, the second lowest level on record.
What did market participants’ say?
“Bottom line, the reopenings are leading to hopes that things will improve, which they will, but with the degree of this being the key question at this point,” said Peter Boockvar, chief investment officer at the Bleakley Advisory Group, in a note.
