By Sunny Oh

Treasury prices fell Tuesday, pushing yields higher, after reports that U.S. negotiators will visit China next week to restart trade talks gave a lift to stocks and weighed on demand for haven assets.

What are Treasurys doing?

The 10-year Treasury note yield rose 3.1 basis points to 2.074%, while the 2-year note rate was up 2.1 basis points to 1.835%. The 30-year bond yield picked up 3.7 basis points to 2.607%. Debt prices move in the opposite direction of yields.

The yield move pushed debt rates to the highest level since July 23, according to Dow Jones Market Data.

What's driving Treasurys?

Reports that U.S. Trade Representative Robert Lighthizer and a broader delegation will visit China next week to renew trade negotiations helped to buoy optimism that both sides were on their way to a resolution of their longstanding trade spat. Chief Economic Adviser to the White House Larry Kudlow said he expected China to start purchasing more U.S. agricultural goods as an act of goodwill.

The White House also reached a two-year agreement with Congressional Democrats to increase federal spending and increase the government's debt ceiling. The deal still needs to be voted on by the House and the Senate, and then signed by President Trump.

The S&P 500 and the Dow Jones Industrial Average traded higher, driving down demand for fixed-income alternatives.

In Europe, Boris Johnson, counted in the pro-Brexit camp, was elected to become the U.K.'s next prime minister, with Theresa May set to resign this week. He beat out Jeremy Hunt in the contest to become the next head of the ruling Conservative Party. Investors say Johnson's election increases the likelihood of a no-deal Brexit that has seen disrupting trade pacts and potentially complicating financial transactions.

In economic data, existing home sales for June ran at 5.27 million, from an annualized pace of 5.34 million in the previous month. The Richmond Fed's manufacturing survey for July came in at a reading of -12 points from 2 points in June.

A $40 billion auction for 2-year Treasury notes struggled to draw investor interest. Treasurys trading can be influenced by influxes of debt supply.

What did market participants' say?

"Several headlines and the accompanying reaction in Treasuries served as a reminder that despite the pre-FOMC doldrums, the uncertainties facing the global economy persist," said Ian Lyngen, head of U.S. rates strategy for BMO Capital Markets.

"The late day selloff on constructive headlines [on trade talks] is more a testament to the summer trading environment than any material breakthrough in the Beijing/DC saga," said Lyngen.

(END) Dow Jones Newswires

July 23, 2019 15:38 ET (19:38 GMT)