November 5, 2019 / 2:08 PM / 2 months ago

TREASURIES-Yields rise on hopes of U.S., China trade deal

    * U.S., China negotiating on tariffs
    * Treasury to sell $38 bln three-year notes
    * ISM services data in focus 

    By Karen Brettell
    NEW YORK, Nov 5 (Reuters) - U.S. Treasury yields rose on
Tuesday on optimism that the United States and China will reach
a deal to de-escalate their trade war, and before the Treasury
Department will make the first sale of $84 billion in new
coupon-bearing supply this week.
    China is pushing U.S. President Donald Trump to remove more
tariffs imposed in September as part of a "phase one" U.S.-China
trade deal, people familiar with the negotiations said on
    The deal, which may be signed this month by Trump and
Chinese President Xi Jinping at a yet-to-be determined location,
is widely expected to include a U.S. pledge to scrap tariffs
scheduled for Dec. 15 on about $156 billion worth of Chinese
imports, including cellphones, laptop computers and toys.
    Bonds are “trading on trade for the most part; there were
some positive headlines in the overnight session,” said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New
    Benchmark 10-year notes             fell 15/32 in price to
yield 1.839%, up from 1.788% late Monday.
    Investors are also preparing for new supply, with the
Treasury due to sell $38 billion in three-year notes on Tuesday,
followed by $27 billion of 10-year notes on Wednesday and $19
billion of 30-year bonds on Thursday.             
    Risk appetite has also improved since U.S. jobs data on
Friday showed that job growth slowed less than expected in
October while wages rose.             
    The next major U.S. economic focus will be the Institute of
Supply Management’s (ISM) services report at 10:00 EST (1500
GMT) on Tuesday.
    The ISM said on Friday that the manufacturing sector
contracted for the third consecutive month in October.


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