The G-20 meeting in Argentina was in focus on the week's final day of trading as investors around the globe awaited a dinner between President Donald Trump and China President Xi Jinping. A growing trade dispute between the globe's two largest economies has been one of many factors roiling fixed-income and equity markets over the past year.
As of the latest reading, the yield on the benchmark 10-year Treasury note dipped to around 3.011 percent, while the yield on the 30-year Treasury bond fell to 3.308 percent. The 2-year Treasury yield, meanwhile, held steady around 2.817 percent. Bond yields move inversely to prices.
While hopes are high that Washington and Beijing can broker a truce, U.S. complaints over intellectual property theft and a yawning trade deficit have not appeared to deter their Chinese counterparts.
Investor angst also rose after CNBC reported that White House trade advisor and China trade hawk Peter Navarro will attend the sit-down between Trump and Xi. Navarro, a proponent of the Trump administration's use of tariffs said earlier this month that any agreement between the two countries will be on Trump's terms and not subject to Wall Street influence.
"I have no idea what to expect this weekend, frankly. It's in both Trump's and Xi's interest to come up with a deal, but Trump will want a deal he'll be happy with," said Arthur Bass, managing director of fixed income financing, futures, and rates at Wedbush Securities. "If we do get an agreement, you could see a sigh of relief in equities, but it's uncertain what fixed income does with all the comments from the Fed this week."
Yields have dipped in recent days amid more dovish commentary from the Fed officials. Chairman Jerome Powell, Vice Chair Richard Clarida and minutes from the Federal Open Market Committee's most recent meeting all suggested greater uncertainty around maintaining quarterly hikes to the federal funds rate.
Saul Loeb | AFP | Getty Images
Jerome Powell listens as US President Donald Trump announces Powell as nominee for Chairman of the Federal Reserve in the Rose Garden of the White House in Washington, DC, November 2, 2017.
Minutes from the Fed's November meeting showed that members are wary of the effect trade tensions and corporate debt could have on economic growth, a sign some took to mean that the FOMC could pause regular rate increase in 2019. Moreover, officials indicated that they could adjust future statements to remove the reference to further rate increases and instead emphasize the Fed's reliance on data when making monetary policy decisions.
"The most significant thing from the Fed was their questioning the use of 'gradual increases' in the statement, which really puts us at 'data dependent,'" Bass added. "It's a change that puts everything beyond a December rate hike in question."
— CNBC's Ryan Browne and Jeff Cox contributed reporting.