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Treasuries Move Sharply Higher Amid Renewed Uncertainty About Trade Deal

Extending the upward move seen over the two previous sessions, treasuries moved sharply higher during trading on Thursday.

Bond prices initially moved higher and saw some further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.7 basis points to 1.691 percent.

The rally by treasuries came as traders looked for safe havens amid renewed uncertainty about the potential for a long-term U.S.-China trade deal.

Optimism about phase one of a trade deal weighed on treasuries earlier this month, but a new report from Bloomberg said Chinese officials are casting doubts about reaching a comprehensive long-term trade agreement.

People familiar with the matter told Bloomberg that Chinese officials have warned in private conversations that they are unwilling to budge on the thorniest issues.

In an apparent effort to calm the markets, President Donald Trump tweeted that the U.S. and China are working on a new site to sign phase one of the trade deal.

Trump and Chinese President Xi Jinping had been due to meet and potentially sign the deal at the APEC summit in Chile, but the Chilean President recently called off the summit due to unrest in the country.

"China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled do to unrelated circumstances," Trump tweeted. "The new location will be announced soon. President Xi and President Trump will do signing!"

On the U.S. economic front, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended October 26th.

The report said initial jobless claims rose to 218,000, an increase of 5,000 from the previous week's revised level of 213,000.

Economists had expected jobless claims to inch up to 215,000 from the 212,000 originally reported for the previous week.

A separate report from the Commerce Department showed personal income and spending both increased in line with economist estimates in the month of September.

The report said personal income increased by 0.3 percent in September after climbing by an upwardly revised 0.5 percent in August.

Meanwhile, the Commerce Department said personal spending edged up by 0.2 percent, matching the revised uptick seen in August.

The Labor Department's closely watched monthly jobs report is likely to be in focus on Friday, overshadowing separate reports on manufacturing activity and construction spending.

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