Treasury prices rose, pushing yields lower, Friday as geopolitical concerns, including those centered on global trade and Italian politics, stoked appetite for assets considered havens like U.S. government paper.
Friday’s trading helped pare the weeklong selloff driven by the multitude of fears in the bond market, including rising bond supply, higher inflation and a faster pace of rate hikes than the Federal Reserve has penciled in.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, -1.63% fell 4.2 basis points to 3.067%, after having touched a seven-year intraday high of 3.126% early on Friday. The maturity trimmed its weeklong climb to 9.6 basis points, its biggest such move since April 20.
The 2-year note yield TMUBMUSD02Y, -1.10% fell 2.3 basis points to 2.548%, leaving its weeklong rise at a basis point. While the 30-year bond rate TMUBMUSD30Y, -1.50% edged lower by 3.6 basis points to 3.210%, adding to a weeklong climb of 9.8 basis points to 3.210%, its largest such move since April 20.
Bond prices move in the opposite direction of yields.
What’s driving the market?
For the week, Treasurys came under pressure on a combination of fears over the Federal Reserve’s tightening, increased bond issuance and inflation expectations.
Part of the selloff was later erased after lingering trade concerns fed appetite for haven assets like U.S. government bonds on Friday. U.S. trade representative Robert Lighthizer said the U.S. was “nowhere near” a deal on the North American Free Trade Agreement. Missing the deadline for submitting a revamped agreement to Congress, this should keep the current Nafta agreement in place while diminishing hopes for an early resolution to the protracted uncertainty around a future trade deal.
Chinese officials disputed reports that they had offered the U.S. a $200 billion cut to its trade deficit. This comes as China and the U.S. hold weeklong trade talks to avert a trade conflict, but investors remain downcast on a successful conclusion to the talks. President Donald Trump said Thursday Beijing had become “spoiled” and that he did not expect much to come out of the negotiations.
Beyond concerns about trade, Italian bonds remained under pressure after the 5 Star Movement and the League, two antiestablishment parties seeking to form a governing coalition, agreed on a common government program to slash taxes and boost welfare spending.
As one of most indebted economies in the eurozone, Italy’s willingness to widen its budget deficit and introduce fiscal stimulus have...