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Treasury yields drop as US-China trade unease, Brexit talks dampen sentiment

Thomas Franck

U.S. government debt yields  slipped on Friday as tensions over a simmering trade war between the U.S. and China and a breakdown in Brexit talks in the U.K. weighed on investor sentiment.

The yield on the benchmark 10-year Treasury note was lower at 2.368%, while the yield on the 30-year Treasury bond traded at 2.814%. The spread between the 10-year Treasury yield and the 3-month Treasury bill yield was -3 basis points. Bond yields move inversely to prices.

Investors pivoted toward safer assets like government debt Friday after President Donald Trump  moved to block Huawei from buying American technology, ratcheted up tensions between the globe's two largest economies. Washington and Beijing are in the middle of a fierce trade dispute, including taxes on billions of dollars worth of imports.

Most recently, the U.S. increased the tariff rate on $200 billion worth of Chinese imports to 25% from 10% after Beijing attempted to renegotiate terms of the trade agreement. China's ruling Communist Party's newspaper struck a defiant tone Friday, insisting the trade war will only make China stronger.

In Europe, the U.K.'s top political parties failed to devise a solution to the Brexit process.

Despite six weeks of talks the ruling Conservative Party and main opposition Labour party, the politicians could not come up with an agreement. Labour leader Jeremy Corbyn wrote in a letter to Prime Minister Theresa May on Friday that talks had "gone as far as they can go."

On the data front Friday, consumer sentiment numbers are due at 10 a.m. ET.

— CNBC's Spriha Srivastava contributed reporting.

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