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U.S. Treasury prices rose Tuesday, pushing yields lower, as investors scaled back expectations for a U.S.-China trade deal after reports said there remained unresolved details that Beijing still wanted to work out before it would sign off on the agreement.
How are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -2.26% fell 6.2 basis points to 1.691%, while the 2-year note rate TMUBMUSD02Y, -2.04% was down 6.1 basis points to 1.553%. The 30-year bond yield TMUBMUSD30Y, -1.13% fell 4.8 basis points to 2.166%.
What’s driving Treasurys?
Investors had the first chance to assess the merits of President Donald Trump’s trade agreement after the weekend, with bond-markets closed on Monday in observance of the U.S. Columbus Day holiday.
Treasury buyers dived into government paper after news reports said the so-called “phase 1” U.S.-China trade deal described by President Donald Trump was not finalized, and that Beijing wanted to iron out a few details before it committed to the agreement.
See: Doubts emerge about US.-China trade deal
Investors saw renewed signs of weakness in export-dependent Germany, the largest economy in the European Union. The German ZEW economic sentiment index fell to a reading of negative 22.8 points this month, from negative 22.5 points in September.
Reuters reported the German government now expected gross domestic product to expand by a 1% pace next year, from 1.5% before, according to a source familiar with the matter.
St. Louis Fed President James Bullard, one of the most dovish members at the Fed, made the case in a speech in London for further interest rate cuts to protect against downside risks but said the central bank will be cautious in making more rate cuts.
In the absence of U.S. economic data on Tuesday, several other Federal Reserve officials are on the docket for Tuesday. Atlanta Fed President Raphael Bostic is due to speak at 9 a.m. Eastern, followed by Kansas City Fed President Esther George at 12:45 p.m. San Francisco Fed President Mary Daly.
What did market participants’ say?
“Yields are falling today, in my view partly on the recognition there is still work to be done on trade, as well as the ongoing weak flow of data across the [globe],” wrote John Briggs, head of strategy at NatWest Markets.
