By Daniel Kruger

U.S. government-bond prices fell Wednesday, dragged lower by a new dose of monetary stimulus from China and investors' improved outlook on trade.

The yield on the benchmark 10-year Treasury note rose to a recent 2.768%, according to Tradeweb, from 2.732% Tuesday.

Yields, which rise as bond prices fall, climbed after the People's Bank of China added stimulus to its economy in order to lower financing costs for small and midsize businesses, according to government-bond analysts. The Chinese government Monday released data showing that economic growth decelerated to the slowest pace since 1990, hampered by a bruising trade fight with the U.S.

Yields also rose as investors assessed the denial by U.S. officials that they had done anything to scuttle trade talks with Chinese officials. The Financial Times had reported Tuesday that the U.S. had turned down an offer to hold preparatory talks before a meeting next week.

"The pressure on China seems high in terms of domestic growth," said Priya Misra, head of interest-rate strategy at TD Securities. Both the Chinese government and the Trump administration are under pressure to reach an agreement given recent market volatility and rising concerns about slowing growth, she said.

"I don't think either side wants tariffs to go up," Ms. Misra said.

With many U.S. government data releases on hold because of the partial government shutdown, which is now at the start of its second month, investors are searching for signals that could help indicate the direction of recent economic activity, analysts said.

Federal-funds futures, which investors use to bet on the direction of central-bank policy, show that investors see a 6% probability that the Federal Reserve will cut interest rates by year-end, down from 13% a week ago, according to CME Group data. The odds of a rate increase in 2019 are 21%, up from 14% a week ago.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

(END) Dow Jones Newswires

January 23, 2019 12:47 ET (17:47 GMT)

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