Treasury yields retreat after China trade data point to cooling global growth

Treasury prices rose on Monday, pushing yields lower, after a raft of weaker trade data underlining slower global growth sapped appetite for stocks to the benefit of haven assets like U.S. government paper.

The 10-year Treasury note yield TMUBMUSD10Y, -2.26% fell 2.7 basis points to 2.672%, while the 2-year note yield TMUBMUSD02Y, -0.80% slipped 2.9 basis points to 2.516%. The 30-year bond yield TMUBMUSD30Y, -1.02% was down 1.9 basis points to 3.017%. Bond prices move in the opposite direction of yields.

Chinese exports slipped 4.4% in December year-over-year, their worst decline in two years, thanks to trade tensions between U.S. and China and cooling global growth. Futures for the Dow Jones Industrial Average YMH9, -0.39%  and the S&P 500 ESH9, -0.41% showed stocks were poised to open lower, pushing investors into the perceived safety of Treasurys.

This follows a tepid inflation report last Friday, with consumer prices falling 0.1% in December, marking their first decline in nine months. Weakening commodity and energy prices have helped underpin the bullish tone in Treasurys by muting inflationary pressures, which can erode the value of a bond’s fixed-interest payments.

“A more bearish outlook for the global economy, in conjunction with plunging headline CPI inflation metrics, establishes a positive set of fundamentals for bond markets,” wrote Carl Weinberg, chief economist for High Frequency Economics.

The government shutdown hit its longest stretch on record on Saturday as President Donald Trump and Congress showed few signs of ending the impasse. The growing uncertainty around the postponement of economic data releases due to the shutdown and an absence of a clear plan to resolve the deadlock could help draw Treasury inflows.

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