Bonds

Treasury yields fall ahead of the Fed's anticipated rate cut

Key Points
  • Meanwhile, Treasury Secretary Steven Mnuchin, and U.S. Trade Representative Robert Lighthizer travel to Shanghai, China to resume trade negotiations.
  • On the data front, Dallas Fed manufacturing figures for July will be released at around 10:30 a.m. ET.

U.S. government debt prices rose on Monday as traders wait to hear from the Federal Reserve later this week.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at 2.0505% while the yield on the 30-year Treasury bond fell to 2.5763%.

Traders are bracing for a potential cut in interest rates for the first time in since the financial crisis. The U.S. Federal Reserve meets Tuesday and will announce its latest rate decision on Wednesday.

Treasurys

Meanwhile, Treasury Secretary Steven Mnuchin, and U.S. Trade Representative Robert Lighthizer are set resume trade negotiations. It marks their first official in-person meeting with the Chinese delegation since the G-20 truce.

The two-day meeting is set to take place in Shanghai on Tuesday after President Donald Trump and Chinese leader Xi Jinping reached a ceasefire last month. However neither side is showing any sense of urgency for a deal.

"With the Fed aggressively offsetting the economic and market shock of the trade war, the incentives to reach a deal have weakened," Ethan Harris, Bank of America's global economist said in a note on Monday.

On the data front, Dallas Fed manufacturing figures for July will be released at around 10:30 a.m. ET.

The U.S. Treasury is set to auction $72 billion in 13-week and 26-week bills.