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Treasuries Move Back To The Upside On Report Of Pessimism About Trade Talks

Following the modest pullback seen last Friday, stocks moved back to the upside during the trading session on Monday.

Bond prices gave back some ground after an early advance but remained firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.6 basis points to 1.808 percent.

Treasuries benefited from their appeal as a safe haven after a tweet from CNBC's Beijing Bureau Chief Eunice Yoon suggested Chinese officials have grown pessimistic about the chances for a trade deal.

"Mood in Beijing about #trade deal is pessimistic, government source tells me. #China troubled after Trump said no tariff rollback. (China thought both had agreed in principle.)" Yoon tweeted.

She added, "Strategy now to talk but wait due to impeachment, US election. Also prioritize China economic support."

Yoon's tweet offset earlier positive sentiment in reaction to a weekend report from Chinese state media indicating the U.S. and China had "constructive discussions" regarding a phase one trade deal in a high-level phone call.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin reportedly talked with Chinese Vice Premier Liu He about the core issues for an agreement.

On the U.S. economic front, the National Association of Home Builders released a report showing homebuilder confidence edged slightly lower in the month of November.

The report said the NAHB/Wells Fargo Housing Market Index slipped to 70 in November after climbing to 71 in October. Economists had expected the index to come in unchanged.

The modest decrease came after the housing market index rose for four straight months to reach its highest level since hitting a matching reading in February of 2018.

Meanwhile, Federal Reserve Chairman Jerome Powell met with President Donald Trump and Treasury Secretary Steven Mnuchin at the White House on Monday.

Powell traveled to the White House at Trump's invitation to discuss the economy, growth, employment and inflation, the Fed said in a statement.

The Fed said Powell's comments were consistent with his remarks at his congressional hearings last week, when he indicated the central bank would leave interest rates on hold for the foreseeable future unless there is a material change in the economic outlook.

Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy, the Fed said.

The Fed chief also told Trump that the Federal Open Market Committee will make its monetary policy decisions based solely on careful, objective and non-political analysis.

In a subsequent post on Twitter, the president described the sit-down with Powell as a "very good & cordial meeting."

Traders are likely to remain on the lookout for news on the trade front on Tuesday, although the Commerce Department's report on new residential construction may attraction some attention.

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