U.S. Treasury yields fell to multi-week lows on Friday as investors moved to a safe haven following President Donald Trump's threats to impose a "massive" increase in tariffs on Chinese imports, accusing Beijing of seeking to stymie trade in rare earths.
The president's lengthy statement on Truth Social sparked a selloff in stocks and pushed rates out of their recent range-bound pattern, with the 10-year Treasury yield hitting its lowest level since mid-September.
Movement in U.S. sovereign debt yields had been in a holding pattern in recent days as a government shutdown, now in its tenth day, has halted the production of crucial economic indicators.
"It's fuel on the fire. For a while it looked like things were going well between Trump and Xi, but China's latest export controls on rare earth minerals set Trump off," said Brian Jacobsen, chief economist at Annex Wealth Management.
"A lot can happen between now and the APEC summit where they were supposed to meet, so it wouldn't be surprising to see tempers cool before then."
In afternoon trading, the yield on the benchmark U.S. 10-year Treasury note fell to a more than one-month low and was last down 9.1 basis points (bps) at 4.057%.
The yield on the 30-year bond was last down 9.6 bps to 4.637% after earlier falling to its lowest since September 5
On the short-end of the curve, the two-year U.S. Treasury yield, which typically moves in line with interest rate expectations, slid 7.5 bps to 3.512%.
Meanwhile, St Louis Federal Reserve Bank President Alberto Musalem said he was "open minded" about the possible need for an additional interest rate cut. Earlier, Fed Governor Christopher Waller had likewise told CNBC the central bank could make "cautious" moves to lower benchmark lending rates, helping comfort investor expectations that the central bank would not be driven to excessive rate cutting by changes in staffing and a weakening labor market.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, flattened to a positive 52.8 bps compared to a positive 54.30 late Thursday.
Also on Friday, the University of Michigan reported that a survey of consumer sentiment had modestly beaten expectations while still recording a slight deceleration in October, marking the third monthly decline and adding to fears from private indicators of labor market weakness.
The president's lengthy statement on Truth Social sparked a selloff in stocks and pushed rates out of their recent range-bound pattern, with the 10-year Treasury yield hitting its lowest level since mid-September.
Movement in U.S. sovereign debt yields had been in a holding pattern in recent days as a government shutdown, now in its tenth day, has halted the production of crucial economic indicators.
"It's fuel on the fire. For a while it looked like things were going well between Trump and Xi, but China's latest export controls on rare earth minerals set Trump off," said Brian Jacobsen, chief economist at Annex Wealth Management.
"A lot can happen between now and the APEC summit where they were supposed to meet, so it wouldn't be surprising to see tempers cool before then."
In afternoon trading, the yield on the benchmark U.S. 10-year Treasury note fell to a more than one-month low and was last down 9.1 basis points (bps) at 4.057%.
The yield on the 30-year bond was last down 9.6 bps to 4.637% after earlier falling to its lowest since September 5
On the short-end of the curve, the two-year U.S. Treasury yield, which typically moves in line with interest rate expectations, slid 7.5 bps to 3.512%.
Meanwhile, St Louis Federal Reserve Bank President Alberto Musalem said he was "open minded" about the possible need for an additional interest rate cut. Earlier, Fed Governor Christopher Waller had likewise told CNBC the central bank could make "cautious" moves to lower benchmark lending rates, helping comfort investor expectations that the central bank would not be driven to excessive rate cutting by changes in staffing and a weakening labor market.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, flattened to a positive 52.8 bps compared to a positive 54.30 late Thursday.
Also on Friday, the University of Michigan reported that a survey of consumer sentiment had modestly beaten expectations while still recording a slight deceleration in October, marking the third monthly decline and adding to fears from private indicators of labor market weakness.
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