U.S. Treasury yields fell Thursday in the first trading session of 2020, which saw stock indexes surge to new highs, fears of a global economic slowdown subside and optimism hold about a partial resolution to the U.S.-China trade war.

Most global markets were closed Wednesday for the New Year’s holiday.

Where are bond yields trading?

The 10-year Treasury note yield

TMUBMUSD10Y, -2.19%

 fell 2.9 basis points to 1.880%, putting it down four of the past six trading days and 42.4 basis points above its 52-week low of 1.456% on Sept. 14, according to Dow Jones Market Data.

The two-year Treasury note

TMUBMUSD02Y, -0.25%

 yield rose 1.4 basis points to 1.573%, snapping a five-day losing streak and marking its biggest one-day gain since Dec. 23. Thursday’s yield was 18.9 basis points below its 52-week low of 1.384% on Oct. 3.

The 30-year bond yield

TMUBMUSD30Y, -2.46%,

known as the long bond, pulled back by 3.9 basis points to 2.339%, ending a two-day win streak and landing it 39.8 basis points above its 52-week low of 1.941 on Aug. 28.

What drove government debt?

Bond investors took cues from China’s central bank, which said it would reduce its commercial banks’ reserve requirements. The 0.5-percentage-point cut in the reserve requirement ratio by the People’s Bank of China will inject more than 800 billion yuan ($114.9 billion) into the financial system.

Data on China also showed that its manufacturing sector grew at a slower rate in December but remained in expansionary territory for a fifth straight month, according to the final Caixin purchasing managers index for the sector, released Wednesday, which fell slightly to 51.5 from a November reading of 51.8. A reading of 50 or above indicates improving conditions.

Those reports, together with news Tuesday of a planned signing of a phase-one trade pact between the U.S. and China, helped lift stocks higher Thursday, handing the Dow Jones Industrial Average

DJIA, +1.16%,

the S&P 500 index

SPX, +0.84%

and Nasdaq Composite Index

COMP, +1.33%

 fresh closing highs.

Thin trading in government debt remained a factor Thursday, continuing beyond the Christmas-holiday week in which trio of debt auctions drew the attention of bond buyers. Good results from all three sales last week helped to cap any yield surge, even as stocks trade near records.

The resilience, even at historically low yields, underlines how demand for bonds among income-starved investors may keep a check on a sharp selloff in Treasurys that would push yields much higher in 2020, bond experts speculate.

In U.S. economic data, markets absorbed a trio of reports showing the American economy has entered 2020 on firming footing. Among these, a weekly employment report showed initial jobless claims — a rough measure of how many people are losing their jobs — slipped by 2,000 to 222,000 in the seven days ended Dec. 28.

Another survey on U.S. manufacturers for December, the IHS Markit manufacturing gauge, signaled that a drop in demand has bottomed out.

What are market participants saying?

“Once yields got to [session lows], it seemed to be enough to bring buyers into the market,” Ben Jeffery, rates analyst, at BMO Capital Markets in New York, told MarketWatch.

But he also caution that Thursday’s moves came against a backdrop of still-thin trading volumes and sparsely populated trading desks following the New Year holiday.

Other market participants had their eyes on data. “As we noted in recent weeks, December and January are the biggest months for labor market turnover for the year, so consequently there tends to be extreme volatility in the claims. This volatility led to the spike in claims to 252K during the first full week of the month,” wrote Thomas Simons, senior vice president of fixed-income economics at Jefferies, in a Thursday research note.

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