Treasuries Move Back To The Upside Amid Lingering Trade Concerns
Treasuries moved to the upside over the course of the trading day on Tuesday, offsetting the weakness seen in the previous session.
Bond prices moved higher early in the session and remained positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.4 basis points to 3.056 percent.
The rebound by treasuries came amid lingering trade concerns even after President Donald Trump announced a new trade deal between the U.S., Mexico, and Canada to replace the North American Free Trade Agreement.
Trump praised the new United States-Mexico-Canada Agreement as an «historic transaction» on Monday but also said it is «too early to talk» with China about the escalating trade dispute between the two countries.
«Can't talk now because they're not ready,» Trump said of China. «Because they have been ripping us for so many years, it doesn't happen that quickly.»
He added, «If politically, people force it too quickly, you're not going to make the right deal for our workers and for our country.»
Reports of the last-minute cancellation of U.S. Defense Secretary Jim Mattis' trip to China have added to the concerns about rising tensions.
Treasuries remained positive as Federal Reserve Chairman Jerome Powell delivered remarks at the annual meeting of the National Association for Business Economics in Boston.
Powell acknowledged concerns about the outlook for inflation due to the low unemployment rate but said the Fed stands ready to «act with authority» if inflation expectations drift materially up or down.
«This historically rare pairing of steady, low inflation and very low unemployment is testament to the fact that we remain in extraordinary times,» Powell said.
He added, «Our ongoing policy of gradual interest rate normalization reflects our efforts to balance the inevitable risks that come with extraordinary times, so as to extend the current expansion, while maintaining maximum employment and low and stable inflation.»
Reports on private sector employment and service sector activity may attract attention on Wednesday along with remarks by several Fed officials.