With traders looking for safe havens amid the escalating trade dispute between the U.S. and China, treasuries moved sharply higher during trading on Thursday.
Bond prices moved steadily higher throughout much of the session before closing significantly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9.7 basis points to 2.296 percent.
The substantial decrease on the day dragged the ten-year yield down to its lowest closing level since October of 2017.
Lingering trade concerns contributed to the rally by treasuries amid further indications of rising tensions between the U.S. and China.
During a weekly briefly, Chinese Commerce Ministry spokesman Gao Feng said the Trump administration must “show sincerity and correct their wrong actions” if the U.S. wants trade talks to continue.
“Negotiations can only continue on the basis of equality and mutual respect,” Gao said, noting that China is closely monitoring developments and preparing a necessary response.
U.S. and China trade talks collapsed earlier this month as President Donald Trump followed through on a threat to raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
The Trump administration also blocked U.S. companies from doing business with Chinese telecom giant Huawei but recently gave the company a 90-day reprieve.
With both sides seemingly unwilling to back down, traders are becoming increasingly wary of the impact of the trade dispute on the global economy.
In U.S. economic news, the Labor Department released a report showing initial jobless claims unexpectedly edged lower in the week ended May 18th.
The report said initial jobless claims dipped to 211,000, a decrease of 1,000 from the previous week’s unrevised level of 212,000. Economists had expected initial jobless claims to inch up to 215,000.
A separate report from the Commerce Department showed new home sales pulled back by much more than anticipated in the month of April.
The Commerce Department said new home sales plunged by 6.9 percent to an annual rate of 673,000 in April after spiking by 8.1 percent to an upwardly revised rate of 723,000 in March.
Economists had expected new home sales to drop by about 2.5 percent to a rate of 675,000 from the 692,000 originally reported for the previous month.
Meanwhile, the Treasury Department announced the details of next week’s auctions of two-year, five-year, and seven-year notes.
The Treasury plans to sell $40 billion worth of two-year notes and $41 billion worth of five-year notes next Tuesday and $32 billion worth of seven-year notes next Wednesday.
A report on durable goods orders in April may attract some attention on Friday, although trading activity may be somewhat subdued as traders look to get a head start on the long Memorial Day weekend.
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