Treasury yields slip amid lingering growth slowdown fears; Fed meeting in focus

U.S. government debt yields slipped on Monday amid ongoing concerns around a potential slowdown in economic growth and ahead of the Federal Reserve's December meeting.

The yield on the benchmark 10-year Treasury note was slightly lower, trading at 2.868 percent, while the yield on the 30-year Treasury bond fell to 3.124 percent. Bond yields move inversely to prices.

Market focus is largely centered on fears around slowing global growth, following the release of weaker-than-expected data from China and Europe on Friday.

Chinese industrial output for November grew 5.4 percent from the previously year, lower than an estimated 5.9 percent, while retail sales rose 8.1 percent last month, falling short of an expected 8.8 percent. European data also disappointed, with the IHS Markit Flash euro zone PMI index falling to 51.7 in December, at its lowest level in four years.

The figures for China particularly weighed on market sentiment, given the unresolved trade war between the U.S. and China. The two nations are attempting to settle their differences within a 90-day truce.

Jerome Powell, chairman of the U.S. Federal Reserve, exits after speaking during Senator Jack Reed's Rhode Island Business Leaders Day event on Capitol Hill in Washington, D.C., U.S., on Thursday, Sept. 27, 2018. 
Andrew Harrer | Bloomberg | Getty Images
Jerome Powell, chairman of the U.S. Federal Reserve, exits after speaking during Senator Jack Reed's Rhode Island Business Leaders Day event on Capitol Hill in Washington, D.C., U.S., on Thursday, Sept. 27, 2018. 

Elsewhere, traders are looking ahead to a crucial Federal Open Market Committee (FOMC) meeting this week, where the U.S. central bank will set interest rates. The Fed is largely expected to hike rates following the conclusion of its meeting on Wednesday, a move that would mark its fourth and final rate hike this year.

But evolving worries over declining inflation and growth expectations may put pressure on the central bank, and investors are less optimistic about the number of times the Fed will raise rates next year.

Meanwhile, New York manufacturers reported on Monday that business activity is still expanding, but growth slower much more than expected in December. The Empire State Manufacturing Survey's general business conditions index, aggregated by the Federal Reserve Bank of New York, fell to 10.9 from 23.3 in November, falling short the 20.6 print expected by economists polled by Refinitiv.

Homebuilder sentiment fell to its lowest level since May 2015 in December as potential buyers delay purchasing new homes despite a pullback in mortgage rates in the past month. Sentiment declined four points in December to 56, well below December 2017's print of 74, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

"We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs," said NAHB Chairman Randy Noel, a homebuilder from LaPlace, Louisiana. "However, recent declines in mortgage interest rates should help move the market forward in early 2019."