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Oct 31, 2019

Bonds | Treasury Yields Report on October 31, 2019: Treasury yields drop amid doubts over long-term US-China trade deal

Fred Imbert, Silvia Amaro



Treasury yields declined on Thursday as investors loaded up on safer assets amid persisting worries around U.S.-China trade relations.
The benchmark 10-year yield fell to around 11 basis points to 1.68%. The 2-year rate slid by 10 basis points to 1.519%. Yields move inversely to prices.
At around 5 a.m. in New York, Bloomberg News reported Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The report, which cites unnamed sources, said Chinese officials are concerned about President Donald Trump’s “impulsive nature” and the risk of him backing out of any kind of deal.
Trump later tweeted China and the U.S. were working on an alternative venue to sign phase one of a trade deal which, he said, is “60%” of the overall deal.
Thursday’s moves came after the Federal Reserve on Wednesday cut rates for the third time in 2019. Nonetheless, policymakers signaled that the bank is set to press pause and wait for further data to decide future steps.
The Fed’s Chairman, Jerome Powell, said: “I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”
“Short-term the market will respect the Fed’s posture,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “But that can change very quickly if we begin to see a more pronounced spillover from the industrial to services/consumer side of the economy. It’s still rough out there.”

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