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U.S. Treasuries plunge as investors turn risk-takers following hopes of positive trade talks

The U.S. Treasuries plunged during Friday’s afternoon session following resumption of talks between the United States and China in Washington yesterday and markets are hopeful of a positive outcome soon on the trade deal.

On the economic front, the export and import price indices for the month of September are due for release today by 12:30GMT and Federal Open Market Committee (FOMC) members Kashkari, Rosengren and Kaplan are due to speak later today which shall add further direction to the debt markets.

The yield on the benchmark 10-year Treasury yield jumped 4 basis points to 1.698 percent, the super-long 30-year bond yield surged 3 basis points to 2.183 percent and the yield on the short-term 2-year gained 4-1/2 basis points to 1.575 percent by 11:30GMT.

While nothing of substance has yet emerged from either set of negotiations, positive mood music yesterday related to US-China trade and Brexit has given a timely boost to market sentiment. Certainly, President Trump appeared relatively upbeat about the trade talks, judging that “We’re doing very well” and that “China has been very nice”(!). He will meet at the White House later today with Vice Premier Liu He, Daiwa Capital Markets reported.

And while there’s no evidence of a meaningful shift in China’s position on technology transfer and state aid, those comments raised hopes of an announcement to postpone, or even cancel, the 5ppt increase in US tariffs, to 30 percent, on roughly $250 billion of imports from China currently scheduled for Tuesday, the report added.

Meanwhile, the S&P 500 Futures gained over 1 percent to trade at 2,970.88 by 11:35GMT.

By Debarati Bir
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