By Sunny Oh

The 2-year note yield slips to a nine-week low

Treasury prices rose, pushing yields lower, on Monday as stocks stumbled following the release of a home-builder confidence gauge that underlined concerns about the housing sector.

The 10-year Treasury note yield was down a basis point to 3.059%, its lowest since Oct. 2, after falling 11.5 basis points last week. The 2-year note yield gave up 2.7 basis points to 2.785%, its lowest since Sep. 14. The 30-year bond yield fell a basis point to 3.317%, its lowest since Oct. 26. Bond prices move in the opposite direction of yields.

Action may be subdued in the holiday-shortened week. The Securities Industry and Financial Markets Association says the bond market will be closed on Thursday for Thanksgiving, and recommends an early close on Friday.

Stocks fell and bonds rallied after the National Association of Home Builder's confidence index fell eight points to 60 in November, its biggest drop since February 2014. The industry has been undercut by higher mortgage rates, in turn, driven by the general climb in Treasury yields this year as the Federal Reserve continues on in its path to normalize rates. Sluggishness in rate-sensitive industries such as home construction could feed fears that higher borrowing costs are starting to take a toll on economic growth, analysts said.

Haven assets like government bonds were buoyed by the selloff in assets perceived as risky, including stocks. The S&P 500 and the Dow Jones Industrial Average were both down nearly 2% (http://www.marketwatch.com/story/dow-poised-to-kick-off-holiday-shortened-week-lower-2018-11-19).

"The forces that threaten to limit housing market activity show no signs of abating," said Thomas Simons, senior money market economist for Jefferies, in a research note.

See: Home builder confidence tumbles the most since 2014 as housing headwinds catch up (http://www.marketwatch.com/story/home-builder-confidence-tumbles-the-most-since-2014-as-housing-headwinds-catch-up-2018-11-19)

On the Fed front, New York Fed President John Williams said he sees the central bank continuing to raise rates, adding that he wanted to lengthen the U.S.'s economic expansion. His remarks come as expectations for rate increases have come down after traders interpreted recent speeches by senior Fed officials like Vice Chairman Richard Clarida as dovish.

Read: Markets think Powell 'blinked' in Dallas (http://www.marketwatch.com/story/markets-think-powell-blinked-in-dallas-2018-11-19)

Investors will also focus on geopolitical tensions, heaping renewed attention on U.S.-China trade tensions ahead of a meeting between President Donald Trump and China's leader Xi Jinping in late November. Vice President Mike Pence struck a strident tone against Beijing in the Asia-Pacific Economic Cooperation summit meeting over the weekend (http://www.marketwatch.com/story/apec-summit-ends-in-disarray-as-us-china-trade-tensions-dominate-2018-11-18), saying Washington wouldn't lift pressure on China unless it "changes its ways."

Pence slammed China's "Belt and Road Initiative," a world-wide infrastructure initiative financed by China, saying it would saddle partner countries with excessive debt.

"The bottom line is are we willing to sacrifice economic growth via higher taxes (aka tariffs) on China in order to achieve the goals of the administration if it doesn't get everything it wants? It seems for now that will be the case," wrote Peter Boockvar, chief market analyst at the Bleakley Advisory Group.

The Treasury International Capitol report on Friday showed China's holdings of U.S. Treasurys fell $13.7 billion, its fourth straight monthly decline. China's stock of U.S. government paper often reflects interventions into foreign-exchange markets to prop up the yuan's value. China's currency is near the key psychological level of 7 yuan versus the greenback (http://www.marketwatch.com/story/heres-why-investors-shouldnt-take-their-eyes-off-chinas-yuan-2018-10-17), with the dollar now buying 6.9397 yuan.

(END) Dow Jones Newswires

November 19, 2018 15:51 ET (20:51 GMT)