US yields ride on optimism of trade and low bids

NEW YORK: US Treasury yields rose on Thursday with record-breaking returns of 30 years, after record lows, hopes of US-China trade talks and a seven-year messy auction that calmed the country's torrid recovery. bond market.

Part of the yield curve remained inverted with a negative spread of -2.9 basis points between the two-year and 10-year returns, which changed little on that day. The yield curve reversed before each US recession in the last 50 years.

China's Ministry of Commerce said on Thursday that Beijing and Washington are discussing the next round of face-to-face trade negotiations scheduled for September.

"The most important thing at the moment is to create the necessary conditions for the two sides to continue their negotiations," Trade Ministry spokesman Gao Feng told reporters at a weekly news briefing. China filed a "solemn representation" with the United States.

China's latest message has reduced safe haven offerings for Treasury securities, German Bunds and major sovereign debt, analysts and investors said.

"If you take away the trade war, you take away the worries," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co.

At the end of the session, US 10-year benchmark Treasury yields reached 1.5063%, up 3.8 basis points from Wednesday. The 30-year bond yield reached 1.9727%, returning to record highs of 1.905% on Wednesday.

Investors are waiting for what the Federal Reserve would do to counter the risks of a potentially lengthy trade fight between the two largest economies in the world.

According to the CME Group's FedWatch programs, traders have indicated that traders have positioned themselves to lower the cut rates at the next monetary policy meeting in September, after the July rate cut, the first since 2008.

Treasury yields continued their ascent following a seven-year US $ 32 billion debt auction, for which the overall supply was the lowest since inception of this title more than ten years ago. The sale of seven-year notes has disappointingly closed the US $ 113 billion fixed-rate public debt this week.

Treasury Secretary Steven Mnuchin told Bloomberg News late Wednesday that the possibility of issuing very long US bonds is "very seriously considered" by the Trump administration.

JP Morgan on Thursday released a survey that showed more investors are willing to hold a very long bond than it was two years ago, but a majority still prefers the Treasury to introduce a 20-year security on a longer than 30 years.

(Report by Gertrude Chavez-Dreyfuss and Richard Leong, edited by Bernadette Baum and Leslie Adler)