U.S. Government Bonds Fall as Trade Talks Resume
12 February 2019 - 5:35AM
Dow Jones News
By Daniel Kruger
U.S. government bond prices fell Monday as China and the U.S.
start a new round of trade negotiations this week.
The yield on the benchmark 10-year Treasury note rose to 2.661%,
according to Tradeweb, from 2.632% Friday.
Yields, which rise when bond prices fall, climbed as investors
focused on a resumption in the talks. U.S. Trade Representative
Robert Lighthizer and Treasury Secretary Steven Mnuchin are
scheduled to meet with China's vice premier later in the week.
Trade remains a focus for investors with many saying the outcome
of the talks could play an important role in determining the
direction of markets. Should the U.S. raise tariffs on Chinese
imports at the beginning of March as planned, it would add to the
difficulties facing China as its economy continues to decelerate.
That could weigh on commodities prices, given China's role in
manufacturing, while rippling into Europe, which sends a
significant amount of exports to China, analysts said.
"It's going to fuel the fire of the risk-on mentality," said
Sean Simko, who oversees bond portfolios at SEI Investments. "The
market is hanging on to any hope out there."
Bonds have retained their appeal with investors in recent weeks
as concerns persist about trade talks and potential a resumption of
the record 35-day government shutdown, which ended in late
January.
The Federal Reserve Bank of New York's Survey of Consumer
Expectations for January showed the bank found respondents expect
rising unemployment down the road. For the fourth straight month,
the survey reported expectations of higher joblessness a year from
now rose, with 40.6% of respondents holding that view, from the
prior month's 38.8%.
Some investors may be willing to look past data that reflects
activity in January, during the period where about 800,000 federal
government workers missed paychecks because of the partial
government shutdown, Mr. Simko said.
Investors have found the safety of bonds attractive because they
have been supported by expectations that the Federal Reserve could
be done raising interest rates for the near feature after lifting
them nine times since December 2015.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
February 11, 2019 13:20 ET (18:20 GMT)
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