US Markets

Yields fall as Trump casts doubt on tariff rollback

Credit: REUTERS/JOSE LUIS GONZALEZ

U.S. Treasury yields held just below three-month highs on Friday as investors evaluated the likelihood that the United States and China would reach a deal to roll back tariffs, as officials made contradictory statements on the issue.

 (Adds Trump comments, updates prices)
    * Contradictory statements on U.S., China tariff roll back
    * U.S. bond yields move higher in line with European debt
    * Consumer price data next week next major economic release

    By Karen Brettell
    NEW YORK, Nov 8 (Reuters) - U.S. Treasury yields held just
below three-month highs on Friday as investors evaluated the
likelihood that the United States and China would reach a deal
to roll back tariffs, as officials made contradictory statements
on the issue.
    China and the United States have agreed to roll back tariffs
on each others' goods in a "phase one" trade deal if it is
completed, officials from both sides said on Thursday.
[nL3N27N228]
    U.S. President Donald Trump said on Friday, however, he has
not agreed to rolling back tariffs sought by China, sparking
fresh doubts about when the world's two largest economies may
end a 16-month trade war that has slowed global growth.
[nL2N27O0Q7]
    “It’s still unclear; we don’t have a lot of clarity on
what’s actually going to happen,” said Tom di Galoma, a managing
director at Seaport Global Holdings in New York.
    Benchmark 10-year note yields <US10YT=RR> rose as high as
1.973% on Thursday on optimism a deal would be reached, the
highest since Aug. 1. On Friday, the yields fell to 1.898% on
Trump's comments, before rising back to 1.930%.
    U.S. government bond yields are also moving in sympathy with
European government bonds, which have sold off on trade optimism
and on expectations that Britain will exit the European Union
after it holds an election in December.
    “The selling pressure is coming on the back of the
expectation that Brexit will happen one way or the other,” di
Galoma said.
    Buoyant stock markets have also reduced demand for bonds.
[.N]
    Investors are also watching economic data for further clues
on whether the Federal Reserve is likely to make further
interest rate cuts.
    The U.S. central bank cut rates last week for the third time
this year and indicated that additional rate decreases may be
unlikely in the near term.
    The next major U.S. economic release will be consumer price
data for October, which will be released on Wednesday. 

 (Reporting by Karen Brettell; editing by Jonathan Oatis and
Cynthia Osterman)
 ((karen.brettell@thomsonreuters.com; 646-223-6274))
 
((-------MARKET SNAPSHOT AT 2:03 p.m. EDT (1903 GMT)-------Sept T-Bond <USU4>                           (+)          Sept 10-Year note <TYU4>                     (+)                                                 Change vs    Current                                          Nyk        yieldThree-month bills<US3MT=RR>  1.5275     (unch)       1.559Six-month bills  <US6MT=RR>  1.5375      (+0.00)     1.575Two-year note <US2YT=RR>     99-22/32   (+01/32)     1.664Five-year note <US5YT=RR>    98-29/32   (+01/32)     1.73210-year note  <US10YT=RR>    98-12/32   (-02/32)     1.93030-year bond  <US30YT=RR>    99-05/32   (-11/32)     2.415                                    DOLLAR SWAP SPREADS                                          LAST      ChangeU.S. 2-year dollar swap spread             4.00     (+0.50)U.S. 3-year dollar swap spread             0.00     (-0.25)U.S. 5-year dollar swap spread            -2.50     (-0.25)U.S. 10-year dollar swap spread           -9.25     (-0.75)U.S. 30-year dollar swap spread          -39.25     (-0.75)))

Keywords: USA BONDS/ (UPDATE 1)

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