2-Year T-Note Sep '19 (ZTU19)

by cmdtyNewswires - 9 minutes ago
Sep 10-year T-notes (ZNU19) this morning are down -16.5 ticks and the 10-year T-note yield is up +5.4 bp to 1.608%. Sep T-notes are lower this morning as reduced U.S./China trade tensions have sparked global stock market gains and undercut safe-haven demand for T-notes. Trade tensions receded after U.S. Commerce Secretary Ross said today that China's Huawei Technologies has been granted a 90-day extension to do business in the U.S. Also, White House economic director Kudlow on Sunday said that recent phone calls between U.S. and Chinese trade negotiators had been "positive." The yuan is down by -0.10% today to 7.0500 yuan/USD, modestly above last Tuesday's 11-1/4 year low of 7.0726 yuan/USD. Another negative factor for T-note prices is bearish carry-over from slide in 10-year German bunds after German Finance Minister Scholz over the weekend said that Germany could spend an extra 50 billion euros ($55 billion) in an economic crisis. The extra government spending would be bearish for German bunds by increasing the supply of debt and stimulating the economy. However, German bund prices saw underlying support from today's downward revision in the Eurozone July CPI to a 2-1/2 year low of 1.0% y/y from 1.1% y/y. The weak inflation picture prompted ECB Governing Council member Muller to say today that "Eurozone inflation clearly trails the target, and this may mean the ECB will have to add stimulus." U.S. inflation expectations are higher today as the 10-year T-note breakeven inflation expectations rate is up by +2.2 bp to 1.572%, rising from last Thursday's 2-3/4 year low of 1.538%.