June 28, 2019 / 6:06 PM / 4 months ago

TREASURIES-Bonds steady before U.S.-China trade talks

 (Updates prices)
    * U.S.-China trade talks on Saturday in focus
    * Quarter-end rebalancing seen helping bond demand
    * U.S. consumer spending increased moderately in May

    By Karen Brettell
    NEW YORK, June 28 (Reuters) - U.S. Treasuries were little
changed on the day on Friday as investors waited on talks
between the United States and China on Saturday for signs that
leaders will de-escalate a trade war that has been blamed for
harming global economic growth.
    U.S. President Donald Trump on Friday said he hoped for
productive talks with Chinese President Xi Jinping, but added he
had not made any promises about a reprieve from escalating
    Bond trading was muted as investors were seen as reluctant
to take large positions before the talks, given the uncertain
    “I don’t think too many people are all that enthusiastic
about leaving for the weekend with a sizable position either
way, because of the unknowns surrounding the G20,” said Tom
Simons, a money market economist at Jefferies in New York.
    Trump and Xi will meet for the first time in seven months to
discuss deteriorating ties between the world's two largest
economies at the G20 summit in Japan.             
    The ongoing U.S.-China trade war is being blamed for slowing
international growth and adding more pressure on central banks
to adopt looser policies.
    The U.S. Federal Reserve is seen as certain to cut interest
rates when it meets in July.
    Yields have hovered around 2% level after dropping to an
almost three-year low of 1.974% last week, after the U.S.
central bank signaled interest rate cuts as soon as July to
battle growing global and domestic economic risks.             
    Demand for bonds from investors rebalancing accounts for
quarter-end provided some support for the market on Friday.
    Data on Friday showed that U.S. consumer spending increased
moderately in May and prices rose slightly, pointing to slowing
economic growth and benign inflation pressures.             

 (Reporting by Karen Brettell in New York
Editing by Chizu Nomiyama and Matthew Lewis)
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