BOND REPORT: Treasury Yields Extend Weeklong Climb As Stocks Surge On U.S.-China Trade Optimism
January 18 2019 - 1:50PM
Dow Jones News
By Sunny Oh
Prices for U.S. government bonds softened Friday, pushing up
yields, as a rally in global stocks held back appetite for haven
assets like U.S. government paper.
The 10-year Treasury note yield rose 4.1 basis points to 2.788%,
extending a weeklong rise from last Friday's closing level of
2.699%. The 2-year note yield picked up 4.6 basis points to 2.612%,
while the 30-year bond yield advanced 2.2 basis points to 3.098%,
its highest levels since Dec. 17. Bond prices move in the opposite
direction of yields.
U.S. equities were on track to post their fourth straight gain,
while stock markets in Asia and Europe were on the rise. The
Shanghai Composite finished higher, and the Stoxx Europe 600 index
was up sharply.
See: China has offered to ramp up U.S. import purchases to $1
trillion per year: report
(http://www.marketwatch.com/story/china-has-offered-to-ramp-up-us-import-purchases-to-1-trillion-per-year-report-2019-01-18)
Bloomberg News reported China would increase purchases of U.S.
imports over six years to more than $1 trillion annually, which
would close the U.S. trade deficit with China by 2024
(http://www.marketwatch.com/story/china-has-offered-to-ramp-up-us-import-purchases-to-1-trillion-per-year-report-2019-01-18).
Reuters also reported
(https://www.reuters.com/article/us-usa-china-trade-exclusive/exclusive-us-pushing-for-regular-review-of-china-trade-reform-progress-idUSKCN1PC2AG)
that U.S. officials were seeking regular assessments of China's
progress on trade reforms, a move that could satisfy U.S. Trade
Representative Robert Lighthizer's demands for a way to verify
China's pledges on trade.
The raft of trade-related developments follows Thursday's Wall
Street Journal report
(http://www.marketwatch.com/story/us-stock-futures-extend-gains-as-investors-cling-to-hope-of-trade-resolution-2019-01-18)that
U.S. officials were debating rolling back tariffs on Chinese
imports to push Beijing into making greater concessions. A Treasury
Department spokesman, however, insisted the U.S. negotiating stance
was still at the discussion stage, and that Treasury Secretary
Steven Mnuchin and U.S. Trade Representative Robert Lighthizer had
yet to make trade-related recommendations.
"Reflection and introspection about the sagacity of the U.S.
tariffs is probably taking place within the administration," said
analysts at Macquarie.
"The U.S. Treasury after all, often takes the role of the
economy's protector, so it makes sense that any request for a
review or re-examination of the tariffs would come from the
Treasury Department," they said.
As for data, industrial production numbers for December rose
0.3%, amid growing interest if U.S. factories are slowing down from
tariff-related trade tensions The University of Michigan's consumer
sentiment survey for January, however, fell to 90.7 from 98.3.
New York Federal Reserve President John Williams said the
central bank should act more cautiously in the face of a softer
economic outlook, echoing calls for the Fed to pause its hiking
cycle and watch see how economic data shakes out before pressing
forward with further increases.
(END) Dow Jones Newswires
January 18, 2019 14:35 ET (19:35 GMT)
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