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Treasury yields lower as China slowdown fears wane; traders await key Brexit vote

Key Points
  • The yield on the benchmark 10-year Treasury note slipped to 2.688 percent, while the yield on the 30-year Treasury bond fell to 3.036 percent.
  • China’s state planner said it would aim to achieve “a good start” for the economy in the first quarter, lifting hopes of further economic stimulus.
  • Traders will likely monitor a crucial U.K. Parliament vote on Prime Minister Theresa May's Brexit deal, which is due to take place Tuesday evening.

U.S. government debt prices were higher on Tuesday, amid hopes that China would introduce more measures to support its weakening economy.

The yield on the benchmark 10-year Treasury note slipped to 2.688 percent, while the yield on the 30-year Treasury bond fell to 3.036 percent. Bond yields move inversely to prices.

China's state planner, the National Development and Reform Commission (NDRC), said on Tuesday that it would aim to accomplish "a good start" for the economy in the first quarter, raising hopes of further stimulus.

Chinese Premier Li Keqiang also said that the government was looking to establish conditions to help it meet its economic targets for the year, Reuters reported, citing Chinese state television.

The news offset fears of an impending slowdown in the world's second-largest economy. Data released earlier this week showed that Chinese exports and imports fell sharply in December, while the country's trade surplus with the U.S. reached a record high.

Traders work on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

Also weighing on investors is the partial government shutdown, which has entered its 25th day and is the longest shutdown on record. The Democratic Party is at odds with the Donald Trump administration over the president's proposed $5 billion U.S.-Mexico border wall.

In other political news, traders will likely monitor a crucial U.K. Parliament vote on Prime Minister Theresa May's Brexit deal, which is due to take place Tuesday evening. May is widely expected to suffer a defeat, with many in her own party set to vote down the European Union withdrawal agreement.

The margin of defeat for May will likely be the big area of focus for market players as it implies how negative an impact the result will have on the Brexit plan and May's leadership. Sterling fell 0.1 percent against the dollar in early morning trade, to $1.2850, while the yield on the 10-year gilt fell to 1.267 percent.

On the data front, producer price index (PPI) inflation and Empire State manufacturing survey numbers are due at 8:30 a.m. ET. Meanwhile, Minneapolis Federal Reserve Bank President Neel Kashkari will give a speech in Rochester, Minnesota, at 11:30 a.m. ET.

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