Treasury prices rose on Monday, pushing yields lower, as investors sought shelter in U.S. government paper as the U.S. and China appeared to adopt hardening positions in trade talks.

What are Treasury yields doing?

The 2-year Treasury note yield

TMUBMUSD10Y, -0.87%

fell 3.9 basis points to 2.213%, around its lowest levels in more than six week. The 10-year note yield

TMUBMUSD10Y, -0.87%

slipped 3.1 basis points to 2.424%. The 30-year bond yield fell 1.5 basis points to 2.858%. Bond prices move inversely to yields.

What’s driving Treasurys?

Risk assets and equities came under pressure as trade tensions showed few signs of abating. Editorials from Chinese state newspapers indicated Beijing was unwilling to back down, even as President Donald Trump said he remained confident of the U.S.’s ability to withstand a protracted standoff. The Trump administration said they were prepared to slap 25% tariffs on the remaining $300 billion of untaxed goods.

White House Economic adviser Larry Kudlow said Trump and China’s President Xi Jinping could meet at the Group of 20 international conference in June.

Futures for the S&P 500

ESM9, -1.31%

and the Dow Jones Industrial Average

YMM9, -1.25%

showed U.S. equities were set to fall at the opening bell.

Asian equities also extended their selloff from torrid trading last week, with China’s CSI 300 index fell 1.7%.

000300, -1.65%

 

What did market participants say?

“Both sides are flashing tariffs just like switchblades. What seems to be next is the Trump ultimatum to the Chinese that they have a month to come to terms or another $300 [billion] of tariffs will go on the goods not yet taxed,” wrote Peter Boockvar, chief investment officer at the Bleakley Advisory Group.

What else is on investors’ radar?

Boston Fed President Eric Rosengren and Fed Vice Chairman Richard Clarida are each set to speak at around 9 a.m. Eastern Time.

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2019-05-13