Bonds

Treasury yields rise amid US-China trade tensions

U.S. government debt prices were lower and yields higher on Thursday amid further uncertainty over U.S.-China trade.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 1.7772%, while the yield on the 30-year Treasury bond also rose to around 2.2346%.

Treasurys

U.S. and Chinese officials had raised prospects of signing a phase one trade deal in a few weeks' time, but the Wall Street Journal reported Wednesday, citing former Trump administration officials, that ongoing U.S.-China trade talks could hit an impasse. Meanwhile, Reuters, which cited trade experts and people close to the Trump administration, reported that the completion of phase one of the trade deal could be pushed into the new year.

Chinese Vice Premier Liu He invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to Beijing to sit down for further negotiations during a phone call last week, according to a report from The Wall Street Journal.

The U.S. and China 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.

Furthermore, according to Morgan Stanley, a phase one deal is perhaps the furthest both countries will go. "Our base case is that the phase one trade deal gets done and that might be about as good as it gets, that phase two and phase three remain distant next year," Andrew Sheets, chief cross-asset strategist at Morgan Stanley, told CNBC at the Morgan Stanley APAC Summit on Thursday.

Meanwhile, the U.S. Treasury is set to auction $55 billion in 4-week bills, $40 billion in 8-week bills and $12 billion in 10-year Treasury Inflation-Protected Securities (TIPS).