By Sunny Oh
Treasury prices rose Thursday, pulling yields lower, after President Donald Trump stoked trade concerns, sending equities across the world lower and stirring demand for government paper.
What are Treasurys doing?
The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +6.06% slipped 3.1 basis points to 2.453%, after coming off an intraday low of 2.425% as the late-session surge in equities sapped haven inflows.
The 2-year note yield /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y +0.06% was down 2.8 basis points to a six-week low of 2.266%. The 30-year bond yield /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y +1.20% fell 1.7 basis points to 2.875%. Bond prices move inversely to yields.
What’s driving Treasurys?
Global stock-markets came under pressure after Trump said at a rally on Wednesday night that the Chinese delegation was “flying in, the vice premier tomorrow is flying in — good man — but they broke the deal. They can’t do that, so they’ll be paying.” As part of a larger delegation, China’s chief trade envoy Vice Premier Liu He visited Washington on Thursday to resume trade talks.
Yields and stocks later came off session lows after Trump said he received a note from Chinese President Xi Jinping, and suggested a deal could still take place.
Investors have closely followed the state of U.S.-China trade talks after Trump threatened over the weekend to raise tariffs on $200 billion of imports to 25% from 10% on Friday, citing the slow progress in negotiations.
Trump’s remarks on Wednesday sent Asian equities lower, with China’s CSI 300 index /zigman2/quotes/210598128/delayed XX:000300 -1.81% lost 1.8% and Japan’s Topix /zigman2/quotes/210598092/delayed JP:180460 -1.42% finished lower by 1.4%. The S&P 500 and the Nasdaq Composite are poised to end lower for a fourth straight session, albeit coming sharply off session lows.
What did market participants say?
“This continues to be the week of an inflection point in the trade negotiations between the U.S. and China. More precisely, although any deal has remained out of reach on a rolling basis for several months now, there’s been a general assumption that an agreement of some form will be reached, even if it doesn’t end up rearranging the aggregate relationship between the world’s two biggest economies,” wrote Jon Hill, an interest-rate strategist at BMO Capital Markets.
“This has contributed to the drift up in risk assets and Treasury yields, and it is exactly this optimistic assumption which is at stake during the recast of the narrative surrounding global trade,” said Hill.
What else is on investors’ radar?
In economic data, weekly jobless claims fell to 228,000 for the seven days ending in March 4. The trade deficit widened to $50 billion in March, from $49.3 billion in February. Producer prices rose 0.2% in April, after they surged 0.6% in the previous month.