U.S. government debt prices were higher and yields lower on Wednesday amid heightened political tensions between the world's two largest economies.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 1.7303%, while the yield on the 30-year Treasury bond was also lower at around 2.1951%.
The so-called "phase one" trade deal between the U.S. and China may not be completed this year, Reuters reported Wednesday. The trade talks could hit an impasse that would derail a so-called phase one trade deal as Beijing insists on the removal of tariffs, the Wall Street Journal reported earlier, citing former Trump administration officials.
President Donald Trump said Tuesday he would impose higher tariffs on Chinese goods if Beijing does not make a deal on trade. "If we don't make a deal with China, I'll just raise the tariffs even higher," Trump said at a Cabinet meeting.
The U.S. Senate also unanimously passed a bill supporting Hong Kong protestors on Tuesday. In response, China's foreign ministry accused the U.S. of interfering in Beijing's domestic affairs.
The bill will now proceed to the House, which already approved its own version of the bill in October. The two chambers of Congress will need to work out the differences between their bills before it can be sent to Trump.
Federal Reserve officials generally saw little need for further rate cuts unless economic conditions change significantly, according to minutes released Wednesday from their most recent meeting. The U.S. central bank decided to lower the federal funds rate by 25 basis points to a range of 1.5% to 1.75% late last month.
Meanwhile, the U.S. Treasury is set to auction $15 billion in 16-day bills on Wednesday.
— CNBC's Huileng Tan contributed to this report.