Yields on U.S. government debt rose Wednesday as Treasury prices gave back some of the previous session’s large gains following a news report that said the U.S. and China remained on track to complete a phase-one trade deal before a Dec. 15 deadline despite President Trump’s comments about a delay on Tuesday.

The yield on the benchmark 10-year Treasury note

TMUBMUSD10Y, +1.60%

 rose 3.1 basis points to 1.739%, while the 2-year Treasury yield

TMUBMUSD02Y, +1.04%

 was off 1.2 basis points at 1.552%. The yield on the 30-year Treasury bond

TMUBMUSD30Y, +1.37%

 rose 3 basis points to 2.192%. Yields and debt prices move in opposite directions.

Yields were boosted after a Bloomberg report said Beijing and Washington were on track to complete a phase one agreement before a Dec. 15 deadline that would see the U.S. impose another round of tariffs on imports of Chinese goods

Treasurys had rallied Tuesday, sending yields down sharply after President Donald Trump hinted he would be comfortable delaying a long-awaited U.S.-China trade deal until after next year’s U.S. presidential election. The remarks sparked a selloff in global equities and other assets perceived as risky, boosting haven assets, including Treasurys. As a result, yields fell, with the rate on the 10-year note seeing its biggest one-day decline since early August.

Analysts said the economic calendar could set the tone, with ADP’s assessment of November private-sector payrolls due at 8:15 a.m. Eastern. The Markit services purchasing managers index for November is due at 9:45 a.m. Eastern, while the more closely watched Institute for Supply Management non-manufacturing index is set for release at 10 a.m. Eastern.

The ISM data, in particular, could be a driver, analysts said, after a disappointing read earlier this week in the ISM manufacturing gauge.

“Risks are tilted to the downside of forecasts after Monday’s weak manufacturing gauge, which included a significant drop in the employment component,” wrote analysts at KBC Bank. “That would be an additional positive for core bonds in the current risk-averse environment.”

Source link

2019-12-04