Treasury yields slide after Trump casts doubt on trade deal

U.S. Treasury prices rose early Wednesday, pushing yields lower, after resurfacing fears around a Trump trade deal weighed on equities, stoking appetite for government bonds.

What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -0.87% slipped 2.8 basis points to 2.092%, while the 2-year note rate TMUBMUSD02Y, +0.24% was down 1.2 basis points to 1.850%. The 30-year bond yield TMUBMUSD30Y, -0.63% fell 2.4 basis points to 2.608%. Debt prices move in the opposite direction of yields.

What’s driving Treasurys?
Investor sentiment in risk assets struggled to rebound amid trade policy concerns, following President Donald Trump’s remarks on Tuesday saying he could raise tariffs on China if he wanted.

European and Asian equities were mixed. Futures for the S&P 500 ESU19, -0.02% and the Dow Jones Industrial Average YMU19, -0.11% were trading slightly higher after Tuesday’s fall.

In economic data, housing starts for June will be released at 8:30 a.m. Eastern.

As for the Federal Reserve, Kansas City Fed President Esther George will speak at 12:30 p.m. The U.S. central bank will also release its Beige Book at 2 p.m., a snapshot of business conditions around the country.

China’s holding of Treasurys fell by $2.8 billion in May to $1.11 trillion, a two-year low, even as Japan raised its holdings by $37 billion to 1.10 trillion, according to the Treasury International Capitol report.

What did market participants’ say?
“U.S. equities are struggling for direction as investors weigh President Trump’s latest tariff threat to China, Fed chair Powell’s dovish reiterations, and a mix bag of earnings results,” wrote Edward Moya, senior market analyst for Oanda.

“Trump’s comments are likely to be political posturing that is aimed at putting more pressure on coming through on their promise to make more purchase of US agricultural products,” said Moya.

MarketWatch

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya