US government bond yields fall as Treasury plans dampen Chinese investment

US government bond prices rose on Monday, pushing yields down, after the Treasury Department planned to restrict companies with at least 25 percent of Chinese ownership by buying one of the largest US technology companies.

What are the Treasures doing?

The yield on 10-year treasury bills

TMUBMUSD10Y, -0.79%

slipped 2.9 basis points to 2.871%. The yield of 2-year notes

TMUBMUSD02Y, -0.49%

declined by 2.1 basis points to 2.529%, while bond yields to 30 years

TMUBMUSD30Y, -0.52%

decreased 2.0 basis points to 3.024%.

Bond prices move in the opposite direction of returns.

What motivates the market?

The Treasury Department is setting limits on Chinese investment in US companies with "technology of industrial importance," a government official on Sunday said. In addition, the National Security Council and the Commerce Department offer export controls to prevent the shipment of important technologies to China. Plans should be announced by the end of next week.

The brakes add to the tariffs imposed by President Donald Trump at $ 50 billion in Chinese imports. Trump also threatened an additional levy on 400 billion dollars worth of imports if Beijing tried to retaliate. Beijing has threatened to match tariffs.

See: Trump's latest threat to US trading partners: lowering tariffs or dealing with the consequences

Lily: Traitor of the trade war: Here are the new levies, imposed and threatened

With the return of the trading tensions that marked the beginning of the week, investors bought assets like US government securities while they were fleeing stocks. The sp

SPX, -0.99%

Dow

DJIA, -1.01%

and Nasdaq

COMP -1.49%

decreased by more than 1%.

Investors will also handle a wave of treasury bond auctions, with about $ 100 billion of coupon-bearing debt to be put on the block between Tuesday and Thursday. Until now, market players have reduced the size of bond auctions with little impact on transactions.

What did the market participants say?

"Stocks are responding much more than bonds to the latest round of outstanding trade disputes, yields are even lower this morning, but not on purchases." The establishment to auction this week's Treasury – and the Possible business problems – had to tip in the opposite direction, "said Jim Vogel, interest rate strategist for Financial FTN, in a note on Monday.

What's on the radar of investors?

The national activity index of the Chicago Fed dropped to -0.15 in May from 0.42 in April. On the other hand, new home sales in May reached an annual rate of 689,000, well above the 668,000 forecasts of economists surveyed by MarketWatch.