U.S. government bond prices swung between gains and losses Friday after President Trump said he hadn’t agreed to roll back tariffs on China, boosting demand for safe assets.
The yield on the benchmark 10-year Treasury note settled at 1.93%, the highest since the end of July and up from 1.924% Thursday, according to Tradeweb.
Yields, which fall when bond prices climb, slipped after Mr. Trump’s comments, which put him at odds with a statement from China that a reduction in tariffs would be part of the first phase of a new trade agreement.
The move helped reverse an earlier climb in yields spurred by speculation that the two countries were continuing to make progress toward an accord. Hopes for an agreement that would lower trade barriers have helped improve the outlook for global economic growth in recent weeks and reduced the appeal of the safety of government bonds.
European government bond yields fell, following gains Thursday that pulled yields on 10-year sovereign debt above zero in France and Belgium for the first time in several months.
While Mr. Trump’s comments probably don’t represent a significant obstacle to reaching an agreement, they are an example of the risks that traders and investors face from the torrent of headlines that have accompanied these negotiations, analysts said.
“Yesterday they said they were close to a phase-one deal,”said Ray Remy, head of fixed-income trading at Daiwa Capital Markets America Inc.”Today we’re not really there, and then we lurch to lower yields.”
Officials from China’s Commerce Ministry said Thursday that tariff relief would be part of the first phase in a trade agreement between the two countries.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose 0.2% to a recent 91.11.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
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