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Trump Gives Treasuries a Lift by Downplaying Progress on Tariffs

Vivien Lou Chen

(Bloomberg) -- U.S. Treasuries reversed losses after Donald Trump downplayed the amount of progress made in trade negotiations with China, saying he hasn’t agreed to roll back all tariffs.

Bonds reached session highs on a burst of volume following Trump’s remarks, driving yields on 10-year notes as low as 1.89% from around 1.92% when he spoke. Yields dropped across the curve Friday. Even still, the Treasury market is poised for the biggest weekly sell-off in about a month. For the week, the 10-year rate is up 19 basis points, spurred by optimism about the trade talks.

Meanwhile, Trump’s comments pushed the euro to its lows of the day against the dollar, retreating as much as 0.3% to $1.1017. The yen got as strong as 109.08 against the U.S. currency, while the yuan briefly weakened past 7 per greenback.

“This seesaw battle going on between the U.S. and China on trade is front and center, and that’s certainly the thing that the market is focused on,” said Tom di Galoma, managing director of Seaport Global Holdings. “I don’t see any immediate result to the trade issue, and even if something does get passed, there’s always going to be some revision to what was agreed upon. It’s going to be a very sticky issue for the market through next year.”

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To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Nick Baker, Mark Tannenbaum

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