By Sunny Oh

China to impose tariffs on U.S. imports of agricultural products, cars, oil and other goods

U.S. Treasury yields pulled back from their highs on Friday after Beijing announced tariffs on U.S. imports (http://www.marketwatch.com/story/china-announces-tariffs-on-75-billion-of-us-goods-2019-08-23)in response to protectionist policies from Washington.

Traders will also wait for Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium in Wyoming, where he may give clues to the central bank's next moves.

What are Treasurys doing?

The 10-year Treasury note yield was flat at 1.611%, after trading at an intraday high at 1.663%. The 2-year note rate fall 0.7 basis point to 1.601%, while the 30-year bond yield rose 1.1 basis point to 2.114%. Bond prices move in the opposite direction of yields.

What's driving Treasurys?

Government bonds rallied and stocks slumped after China's finance ministry on Friday (http://www.marketwatch.com/story/china-announces-tariffs-on-75-billion-of-us-goods-2019-08-23)said it would impose tariffs on $75 billion of U.S. goods, staggered over two stages. The first batch of tariffs would kick in at Sep. 1, with the second batch coming in at Dec. 15.

Futures for the S&P 500 and the Dow Jones Industrial Average pointed to a lower open for U.S. equities.

The worsening economic outlook has led investors to demand further clarity on the Federal Reserve's policy decisions in its coming meetings. Market participants are looking for Powell to offer additional details on how it intends to react to a backdrop of simmering trade policy tensions, an uncertain environment for corporations to invest in their own operations.

But several members of the Federal Open Market Committee including Kansas City Fed President Esther George expressed their opposition to further interest rate cuts. They felt slowing but still healthy economic conditions did not necessitate easier monetary policy.

On the side of the doves, St. Louis Fed President James Bullard (http://www.marketwatch.com/story/feds-bullard-backs-more-interest-rate-cuts-2019-08-23)said he would support more rate cuts to serve as insurance against growth risks from a contracting manufacturing sectors.

What did market participants' say?

"The minutes from the July Fed meeting, published Wednesday, showed a clear split between Fed officials over the need for rate cuts. This split appears to have widened since the meeting following several speeches from officials late yesterday and overnight," wrote Peter Schaffrik, global macro strategist at RBC Capital Markets.

(END) Dow Jones Newswires

August 23, 2019 09:01 ET (13:01 GMT)