Treasuries Rebound Amid Lingering Trade Concerns

(RTTNews) - After drifting modestly lower over the two previous sessions, treasuries regained some ground during the trading day on Wednesday.

Bond prices moved to the upside in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 2.393 percent.

The rebound by treasuries came as traders continued to worry the trade dispute between the U.S. and China is escalating into a full-fledged trade war.

A report from the South China Morning Post said Chinas is re-examining the entire bilateral economic relationship between the U.S. and China.

The SCMP said Chinese government advisers are highlighting the risk of sourcing critical supplies from an increasingly hostile U.S. following the Trump administration's recent move to blacklist Chinese tech giant Huawei.

Mei Xinyu, a fellow at the research institute under China's Ministry of Commerce, told the SCMP that Beijing should prepare for the worst-case scenario to defend its rights in climbing up the global value chain through technological catch-up.

"Even if a deal is reached, it could be torn apart [by President Donald Trump] easily at any time," Mei said, comparing the current trade talk deadlock to the Panmunjom peace talks during the Korean War.

Adding to the trade concerns, Treasury Secretary Steven Mnuchin told CNBC's Ylan Mui the U.S. has no plans to go to Beijing to resume trade negotiations.

Treasuries remained firmly positive following the release of the minutes of the latest Federal Reserve meeting, which suggested the central bank is in no rush to alter the path of interest rates.

The minutes showed members agreed that a patient approach to determining future adjustments to rates would likely remain appropriate for "some time."

Citing an environment of moderate U.S. economic growth and muted inflation pressures, the Fed expects to remain patient even if global economic and financial conditions continued to improve.

The Fed decided to leave interest rates unchanged at the two-day meeting ended May 1st, as uncertainties affecting the U.S. and global economic outlooks had receded but inflation pressures remained muted.

Traders will be on the lookout for any trade-related news on Thursday but are also likely to keep an eye on reports on weekly jobless claims and new home sales.