Aug 29, 2019

Bonds | U.S. Treasury Yield Report: Treasury yields slide pauses after China says it's open to resolving trade war

Thomas Franck

U.S. government debt yields paused their monthlong slide on Thursday after Chinese officials indicated that the country would be open to ending its trade war with the United States.
The yield on the benchmark 10-year Treasury note was trading higher at 1.513% albeit still under that of the 2-year yield of 1.522%. The yield on the 30-year Treasury bond was also higher at 1.992%, breaking above the 3-month bill rate. Yields fall as prices rise.
The uptick in Treasury yields came after China said it hoped to conclude its bitter trade war the U.S. with a “calm ” attitude.
Asked about its ongoing trade war with the U.S., China’s commerce ministry said Thursday that it was opposed to escalating trade tensions, hinting Chinese authorities will not retaliate against the latest round of U.S. tariffs. That appeared to spark a pivot back toward riskier assets as the S&P 500 jumped more than 1% in Thursday’s session and long-term debt yields rose faster than their shorter-termed peers.
On Wednesday, the rate on the benchmark 30-year Treasury bond sank to an all-time low, while the U.S. yield curve inverted even further. The move extended losses from earlier in the week, when the spread registered its lowest level since 2007.
A 10-year rate below the 2-year yield is viewed by fixed income traders as an important recession prognosticator, marking an unusual phenomenon as bondholders receive better compensation in the short term.
CNBC’s Sam Meredith contributed to this report.

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