The yield on the benchmark 10-year note traded around 2.73 percent, while the 2-year yield held at 2.528 percent. Bond yields move inversely to prices.
Treasury yields had a volatile year as investors around the world struggled with tighter monetary policy, fears of an economic slowdown and an ongoing U.S.-China trade war.
The 10-year yield traded as high as 3.26 percent in 2018, its highest level since 2011, as the Fed raised rates this year and started paring down its massive balance sheet. Overall, the Fed hiked rates four times in 2018.
But Treasury yields fell off those levels as investors began to fear that the global economy was slowing down. Earlier this month, IHS Markit said its U.S. composite output index fell to a 19-month low for December. They also said services and manufacturing PMIs dropped to their lowest levels in about a year. PMIs are used by investors as leading economic indicators, so a decline in those numbers is sometimes interpreted as a warning sign of slowing economic activity.
Yields were also volatile as trade tensions between China and the U.S. remain high. The two countries have slapped tariffs on billions of dollars worth of their goods. The tariffs come Trump administration is seeking what it thinks are better trade conditions with China.
Both countries agreed earlier this month to a 90-day ceasefire to try and work out a permanent agreement. On Saturday, President Donald Trump said he had a “very good call” with Chinese President Xi Jinping on Saturday to discuss trade. He also claimed that “big progress” was being made on this front. His statements have brought optimism to stocks worldwide that have been under pressure this year.
Following the tweet, however, the Wall Street Journal reported that Trump “may be overstating how close the two sides are to an agreement,” citing sources “familiar with the state of negotiations.”
These fears have kept a lid on yields all year. Still, the 10-year note yield is well above where it started out 2018. The benchmark rate traded around 2.4 percent to start off 2018.