Bonds

Treasury yields fall amid uncertainty over US-China trade deal

U.S. government debt prices rose Thursday as investors flocked to safe assets amid worries about a U.S.-China trade resolution.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.823%, while the yield on the 30-year Treasury bond was also lower at around 2.31%.

Treasurys

Market players are largely focused on U.S.-China trade talks, after reports suggested that there is an impasse over issues such as agricultural products and intellectual property. President Trump had announced last month that the U.S. had reached an agreement in principle with China and that they were close to signing a phase one trade deal.

Chinese Ministry of Commerce spokesman Gao Feng said overnight that China and the U.S. are holding "in-depth" discussions about a phase one deal, but added the rolling back of some tariffs is key to striking a deal.

China and the U.S. have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

On the data front, weekly jobless claims reached 225,000 last week, the highest number since June. Meanwhile, U.S. producer prices had their biggest gain in six months in October.

"Underlying the drift lower in rates has been the recognition that not much has actually changed on the global macro front in the past week and a half," said Ian Lyngen, head of U.S. rates at BMO Capital Markets. "The Fed's not cutting in December, global growth is slowing (though perhaps not as sharply as feared), and a trade deal between the US and China is still in the works, and will be for some time."

Federal Reserve Chairman Jerome Powell said in his testimony on Wednesday interest rates are unlikely to change as long as the economy keeps growing.

New York Fed President John Williams said in a speech Thursday that interest rates and the economy are in "a good place."

The Treasury is due to auction $55 billion in 4-week bills and $40 billion in 8-week bills.