BOND REPORT: Treasury Yields Slip Ahead Of Trump-Xi Meeting

Date : 06/24/2019 @ 1:17PM
Source : Dow Jones News

BOND REPORT: Treasury Yields Slip Ahead Of Trump-Xi Meeting

By Sunny Oh

Treasury yields slipped early Monday as traders geared up for President Donald Trump's meeting with his Chinese counterpart Xi Jinping, amid hopes that their get-together could stave off a further escalation of a U.S-China trade clash.

What are Treasurys doing?

The 10-year Treasury note yield slipped 3.3 basis points to 2.033%, while the 2-year note rate was down 2.9 basis points to 1.751%. The 30-year bond yield tumbled 4.3 basis points to 2.548%.

What's driving Treasurys?

With little U.S. economic data expected this week, investors said they would look towards the upcoming G-20 meeting in Osaka, Japan on Friday and Saturday, where Trump and Xi are set to hold talks over the ratcheting trade dispute between the two largest economies in the world. Market participants are hopeful both sides will hash out a deal to diffuse tensions and set out a path for an eventual removal of tariffs.

Buoying optimism around the talks, reports said U.S. Vice President Mike Pence postponed a speech on China last Friday. In a previous speech in October, Pence had condemned China on its track record of human rights and economic strategy (https://www.scmp.com/news/china/diplomacy/article/3015625/us-vice-president-mike-pences-speech-expected-be-critical), remarks that some viewed as inflaming tensions between Beijing and Washington.

U.S. Treasuries' prices have rallied this year as the lack of progress on a trade resolution has weighed on business investment, trade-dependent manufacturing and consumer confidence.

See: How the Trump-Xi trade meeting could set the stock-market tone for the summer (http://www.marketwatch.com/story/how-the-trump-xi-trade-meeting-could-set-the-stock-market-tone-for-the-summer-2019-06-22)

What did market participants say?

"The market awaits President Trump and President Xi's meeting later this week at the G20 summit in Japan," wrote Petter Schaffrik, a global macro strategist for RBC Capital Markets.

"Adding to the increasing optimism surrounding the talks, US Vice President Mike Pence decided to call off a planned speech on China last Friday, having upset China with a speech last October," said Schaffrik.

What else is on investors' radar?

The Ifo institute said its German business climate indicator fell to a reading of 97.4 in June, its lowest since Nov. 2014 (https://www.reuters.com/article/us-germany-economy-ifo/german-business-sentiment-lowest-since-2014-ifo-idUSKCN1TP0UJ). Weakening economic sentiment in the export powerhouse has helped drive down yields for German government paper, or bunds.

The 10-year bund yield fell 2.8 basis points to a negative 0.31%.

 

(END) Dow Jones Newswires

June 24, 2019 08:02 ET (12:02 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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