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10-year, 30-year government bond

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U.S. government bond yields for longer-dated debt fell on Monday as investors wrestled with the threat of intensifying trade clashes between the U.S. and China and the ripple effects those fresh animosities could have on global markets.

The 10-year U.S. government bond yield TMUBMUSD10Y, -0.60% fall 2.3 basis points to 2.929%, following a weekly yield decline of 0.9 basis point, according to Dow Jones Market Data based on levels at 3 p.m. Eastern Time Friday.

The U.S. two-year note yield TMUBMUSD02Y, +0.00% , which is the most sensitive to shifts in inflation and monetary policy, was virtually unchanged from late Friday’s level at 2.645%. The short-dated maturity also on Friday notched its largest weekly drop since the week ended May 25. The 30-year bond yieldTMUBMUSD30Y, -0.48% meanwhile, gave up 2.5 basis points to 3.068%. The yield of the so-called long bond has advanced for three straight weeks through Friday.

Bond yields fall as prices climb.

The differential between 2-year and 10-year Treasury notes, known as the yield curve, stood at 28.4 basis points or 0.284 percentage points, from 30.7 basis points on Friday. Concerns that the yield curve could eventually invert, with short-dated yields moving above long-dated yields, is keeping investors on edge. An inverted yield curve has often preceded a recession.

On Friday, Treasury yields fell after the closely watched reading of monthly employment for July, came in weaker than expected, and China announced retaliatory tariffs against the U.S.

July Labor Department data showed that the economy added 157,000 jobs last month, compared with a 195,000 average estimate in a MarketWatch survey of economists.

Friday’s economic data looked unlikely to deter the Federal Reserve from moving forward with its plans to hike rates as many as twice more in 2018 and as early as next month. Wall Street assigns a roughly 94% chance of a rate increase at the central bank’s next two-day gathering ended Sept. 26, according to data from CME Group Inc.

Separately, China announced tariffs on $60 billion of U.S. products on Friday, in response to the U.S.’s planned 25% tariffs on $200 billion of Chinese imports. On Sunday, President Donald Trump tweeted that tariffs are “working big time.”

In Asia, the Shanghai Composite Index SHCOMP, -1.29% fell 1.3% to its lowest level since February 2016, and the China Shenzhen A Share index399106, -2.08% dropped 2.1%, highlighting lingering concerns about rising tensions over tariffs as well as a sluggish Chinese economy. However, the Dow Jones Industrial Average DJIA, +0.02% and the S&P 500 index SPX, +0.20%looked set to try to shake off those concerns and rise in early Monday trade.

Looking ahead, fixed-income investors will watch for an auction of 3-year, 10-year and 30-year paper throughout the week. Later Monday, market participants await a July survey of consumer expectations, due at 11 a.m. Eastern Time.

Source: marketwatch.com

U.S. government bond yields for longer-dated debt fell on Monday as investors wrestled with the threat of intensifying trade clashes between the U.S. and China and the ripple effects those fresh animosities could have on global markets.

The 10-year U.S. government bond yield TMUBMUSD10Y, -0.60% fall 2.3 basis points to 2.929%, following a weekly yield decline of 0.9 basis point, according to Dow Jones Market Data based on levels at 3 p.m. Eastern Time Friday.

The U.S. two-year note yield TMUBMUSD02Y, +0.00% , which is the most sensitive to shifts in inflation and monetary policy, was virtually unchanged from late Friday’s level at 2.645%. The short-dated maturity also on Friday notched its largest weekly drop since the week ended May 25. The 30-year bond yieldTMUBMUSD30Y, -0.48% meanwhile, gave up 2.5 basis points to 3.068%. The yield of the so-called long bond has advanced for three straight weeks through Friday.

Bond yields fall as prices climb.

The differential between 2-year and 10-year Treasury notes, known as the yield curve, stood at 28.4 basis points or 0.284 percentage points, from 30.7 basis points on Friday. Concerns that the yield curve could eventually invert, with short-dated yields moving above long-dated yields, is keeping investors on edge. An inverted yield curve has often preceded a recession.

On Friday, Treasury yields fell after the closely watched reading of monthly employment for July, came in weaker than expected, and China announced retaliatory tariffs against the U.S.

July Labor Department data showed that the economy added 157,000 jobs last month, compared with a 195,000 average estimate in a MarketWatch survey of economists.

Friday’s economic data looked unlikely to deter the Federal Reserve from moving forward with its plans to hike rates as many as twice more in 2018 and as early as next month. Wall Street assigns a roughly 94% chance of a rate increase at the central bank’s next two-day gathering ended Sept. 26, according to data from CME Group Inc.

Separately, China announced tariffs on $60 billion of U.S. products on Friday, in response to the U.S.’s planned 25% tariffs on $200 billion of Chinese imports. On Sunday, President Donald Trump tweeted that tariffs are “working big time.”

In Asia, the Shanghai Composite Index SHCOMP, -1.29% fell 1.3% to its lowest level since February 2016, and the China Shenzhen A Share index399106, -2.08% dropped 2.1%, highlighting lingering concerns about rising tensions over tariffs as well as a sluggish Chinese economy. However, the Dow Jones Industrial Average DJIA, +0.02% and the S&P 500 index SPX, +0.20%looked set to try to shake off those concerns and rise in early Monday trade.

Looking ahead, fixed-income investors will watch for an auction of 3-year, 10-year and 30-year paper throughout the week. Later Monday, market participants await a July survey of consumer expectations, due at 11 a.m. Eastern Time.

Source: marketwatch.com

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