U.S. government debt saw muted trading Wednesday, only registering slight yield moves across the board, as investors digested an auction of 10-year government bonds, with tariff tensions between the U.S. and China remaining in focus.
The 10-year Treasury note yield TMUBMUSD10Y, -0.41% edged down 0.4 basis points to 2.969%, according to Dow Jones Market Data, based on levels at 3 p.m. Eastern.
The 30-year bond yield TMUBMUSD30Y, -0.31% slipped 0.1 basis point to 3.118%. Yields for 10-year and 30-year paper have been down for four of the past five sessions.
The two-year note yield TMUBMUSD02Y, +0.00% meanwhile, was virtually unchanged at 2.674%.
Yields fall as bond prices rise.
On Tuesday, the Trump administration completed plans to impose tariffs on an additional $16 billion of Chinese imports. The duties, which were widely expected and would take effect Aug. 23, brings the total amount of Chinese goods covered by tariffs to $50 billion.
As expected, China on Wednesday announced plans to retaliate with duties on an equivalent amount of U.S. goods.
See: Trade-war tracker: Here are the new levies, imposed and threatened
Tariff disputes between the world’s largest economies have driven some focus in fixed-income markets, because those tensions have the potential to roil global economies if they intensify and drive a flight in to havens like bonds.
Meanwhile, Richmond Fed President Tom Barkin early Wednesday said solid growth, low unemployment and inflation around a 2% annual rate “calls for” moving interest rates back to normal levels, and the U.S. central bank “should follow through.” Barkin made his comments at a speech in Roanoke, Va.
Notably, bond investors absorbed an auction of $26 billion in 10-year notes, which saw strong bidding, according to sources. The sale is a part of some $78 billion in government debt that was set to be sold this week.
“It was a strong auction that attracted solid demand from indirect and direct bidders,” said Ward McCarthy, chief financial economist at Jefferies in a research note. Indirect bidders refers to a category that includes foreign central banks and large institutional investors, while direct bidders references so-called primary dealers, made up of large U.S. banks that are required to support government auctions.
Government debt sales can influence trading in outstanding debt, with an increase in supply tending to push yields higher and prices lower.
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