U.S. government bond rates pull back as trade impasse stokes appetite for havens

Treasurys rallied Wednesday, driving yields lower, after the Trump administration said it plans on slapping a fresh round of tariffs on Chinese goods, compelling officials in Beijing to warn that they would respond.

Later news reports suggested trade negotiations between the U.S. and China had run aground, drawing investors into haven assets such as U.S. government debt.

What are Treasurys doing?

The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, +0.42% shed 2.9 basis points to 2.844%, but higher than its intraday nadir of 2.827%. The 30-year Treasury bond yield TMUBMUSD30Y, +0.17% gave up 2.5 basis points to 2.945%.

The two-year Treasury note yield TMUBMUSD02Y, -0.15% was down 1.4 basis points at 2.578%, after marking its largest one-day yield gain since June 13 on Tuesday. The short-end maturity reached its highest yield since July 2008.

Yields and bond prices move in opposite directions.

What’s driving markets?

The White House late Tuesday said it would assess 10% tariffs on a further $200 billion in Chinese goods. The move is seen as deepening the rift with Beijing and sending a message to other trading partners, in North America and the European Union, that Washington won’t back down in a trade fight. The U.S. last week hit Beijing with levies on $34 billion in goods, and Beijing retaliated with tariffs of the same amount.

See: World’s largest asset manager: it isn’t a trade war yet—here’s when to really worry

The new tariff proposals won’t take effect for another month or two but have refocused fears centered on trade that had begun to recede somewhat on Wall Street and stoked a run-up in assets viewed as risky, like stocks, and away from the perceived safety of government bonds.

Adding to those concerns, a report from Bloomberg News suggested talks between the U.S. and China

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