Treasury Yields Dip as U.S.-China Trade Talks Resume Amid Market Caution
U.S. Treasury yields fell on Tuesday as investors closely monitored the ongoing trade negotiations between the United States and China in London. The 10-year Treasury yield dropped nearly 3 basis points to 4.456%, while the 2-year yield declined about 1 basis point to 3.993%. The 30-year Treasury yield also slid 3 basis points to 4.921%, reflecting cautious optimism in financial markets. Yields and bond prices move inversely, and the decline signals investor interest in the safety of government bonds amid global uncertainties.
The trade talks, now in their second day, follow a recent high-level phone call between President Donald Trump and Chinese President Xi Jinping. U.S. officials, including Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer, met their Chinese counterparts in London to continue discussions. The renewed dialogue marks a potential turning point after months of trade tension that began with steep U.S. tariffs on Chinese imports.
These discussions come after erratic shifts in trade policy, such as the U.S. initially imposing tariffs as high as 145% on Chinese goods before reducing them to 30%. Deutsche Bank analysts noted the market’s growing resilience to policy reversals and ongoing uncertainty, highlighting that investors have become increasingly accustomed to volatility driven by international trade developments.
Adding to the complexity of negotiations is China’s domestic economic pressure. Consumer prices in China dropped for the fourth straight month in May, with the Consumer Price Index (CPI) declining 0.1% year-over-year. This deflationary trend increases the urgency for China to strike a favorable trade deal, which could help stabilize its economy amid weakening consumer demand.
Market watchers now await concrete outcomes from the London talks, though expectations remain tempered by past unpredictability. The Treasury market’s movement suggests investors are cautiously hopeful but prepared for further twists. Analysts say both sides have reasons to find common ground, but a definitive breakthrough remains uncertain.
Source: CBNC