U.S. Treasury yields retreated on Monday after a fall in Chinese trade underlined how the second-largest economy in the world was feeling the pain from longstanding trade tensions between Washington and Beijing.
What are Treasurys doing?
The 10-year Treasury note yield
TMUBMUSD10Y, -1.04%
fell 2.1 basis points to 1.822%, while the 2-year note rate
TMUBMUSD02Y, -0.98%
was down 0.8 basis point to 1.613%. The 30-year bond yield
TMUBMUSD30Y, -0.92%
slipped 2.2 basis points to 2.262%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
Yields ended last week higher following a hotter-than-expected reading in the employment report, which showed that U.S. economy had gained 266,000 jobs in November and that unemployment fell back to a 50-year low of 3.5%. Strength in the labor market has helped offset concerns that deteriorating global economic conditions would eventually spill over into the U.S.
See: U.S. sees hiring surge in November as economy adds 266,000 new jobs
Much of these concerns revolve around shrinking international trade, reflected by China’s report that exports to the U.S. had fallen 23% year-over-year in November. More broadly, exports to all countries fell 1.1% year-over-year.
In politics, the Justice Department will release its report on the Federal Bureau of Investigation’s probe into questions over whether there was collusion between Moscow and members of President Donald Trump’s presidential election campaign in 2016. Democrats will also conduct its second public impeachment hearing on Monday.
Investors will look forward to a busy week, with traders scheduled to take down a round of government debt auctions. Policy makers at the Federal Reserve will also hold their last meeting of 2019, though the central bank is expected to stand pat this week.
What did market participants’ say?
“Treasuries have started the most pivotal week remaining in 2019 with a modest bid resulting from an unexpected drop in Chinese exports during the month of November,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. “It wasn’t all that ‘shocking’ to see international trade under pressure given the broader environment, however it nonetheless serves as a stark reminder that the situation remains poised to deteriorate before it improves.”
Source : MTV
