U.S. Government Bonds Rise on Global Growth Concerns
23 January 2019 - 9:37AM
Dow Jones News
By Daniel Kruger
U.S. government bond prices rose Tuesday as investors sought
safer assets amid rising concerns about the pace of global economic
growth.
The yield on the benchmark 10-year Treasury note fell the most
in more than two weeks, settling at 2.732% from 2.783% Friday.
Yields, which fall as prices rise, declined after data Tuesday
showed Chinese economic growth decelerated to the slowest pace
since 1990, with a bruising trade fight with the U.S. exacerbating
weakness in the world's second-largest economy.
A survey also showed a slippage in German economic sentiment,
adding to worries that Europe's contributions to the world-wide
expansion could diminish further.
Yields extended their decline later after the Financial Times
said the Trump administration turned down an offer to hold
preparatory trade talks with China, a report administration
officials denied.
The slowdown in Chinese growth is important because many
investors are concerned that diminished economic activity there has
the potential to weigh on activity in Europe.
China's expansion has fueled demand from commodity exporters,
and officials in the country have been trying to generate an
environment conducive to stronger consumer spending.
Investors also said they are concerned that trade tensions could
be exacerbated by U.S. officials' decision to extradite the finance
chief of Huawei Technologies, Meng Wanzhou, on allegations that she
defrauded banks about Huawei's business in Iran in violation of
U.S. sanctions. She denies the charges.
There are "concerns that if the talks break down it's going to
lead to a trade war," said Larry Milstein, head of Treasury and
agency trading at R.W. Pressprich & Co.
Additional tariffs and the drag on the U.S. and Chinese
economies would "have a significant negative impact on the global
economic picture," he said.
Concerns about the outlook for the global economy dragged on
stocks in Asian and European trading, fueling demand for the safety
of government bonds, analysts said. Bond prices were also supported
by comments by Fang Zinghai, vice chairman of the China Securities
Regulatory Commission, who said he doesn't think China will
significantly reduce its holdings of U.S. government debt.
While few analysts see much risk that China will sell its
Treasury holdings, the comments could have been meant as a sign of
goodwill.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
January 22, 2019 17:22 ET (22:22 GMT)
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