U.S. government debt yieldsfell on Tuesday as the U.S. government shutdown and trade fears between Washington and Beijing stoked fears of slower economic growth.
The yield on the benchmark 10-year Treasury note fell about 4 basis points to 2.755 percent at 10:57 a.m. ET, while the yield on the 30-year Treasury bond dropped to 3.074 percent. Bond yields move inversely to prices.
Appetite for government debt rose over the long Martin Luther King Jr. holiday weekend after David MacNaughton, Canada's ambassador to the U.S., said that the U.S. has told Canada that it will request Huawei executive Meng Wanzhou be extradited. Meng, the daughter of Huawei Technologies founder Ren Zhengfei, was arrested in Canada at the request of the United States over alleged violations of U.S. sanctions on Iran.
Following the arrest, relations between China and the United States turned icy, a potential headwind to a permanent trade agreement between the two economic powerhouses. Huawei is the world's largest manufacturer of telecommunications equipment.
"Between Brexit, the U.S. government shutdown and the China news, the culmination of the three means trading will be sensitive to political developments," said Jon Hill, interest rate strategist at BMO Capital Markets. "The political back-and-forth seems well-entrenched."
International markets are showing a muted to downbeat picture on Tuesday, as global growth concerns weigh, with markets in Asia and Europe, along with U.S. futures, all seeing red.
On Monday, the International Monetary Fund (IMF) announced that it had revised down its estimates for global growth, with it projecting a 3.5 percent growth rate across the globe this year, and 3.6 percent for 2020. In October, the institution slashed its forecasts, due to increased trade tariffs between the States and China; and on Monday, it added that the global economic expansion was showing signs of losing momentum.
In the report, the IMF stated that risks to global growth continue to tilt to the downside, with topics such as Brexit, and escalating trade tensions adding to the pressure.