U.S. Treasuries yields disappoint on investors’ risk aversion as trade war fears intensify

The U.S. Treasury yields disappointed during late European session Monday, following a decline in equities after trade war worries intensified with President Donald Trump hurling attacks over counter countries over the last week. This week on Wednesday the President  will meet the European Commission President Jean-Claude Juncker, and with the U.S. having threatening to impose import tariffs on cars coming from the EU, trade policy will be at the top of the agenda.

The yield on the benchmark 10-year Treasuries lost a little over 1 basis point to 2.88 percent, the super-long 30-year bond yields also slipped nearly 1 basis point to 3.02 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.58 percent by 11:10GMT.

The most notable releases in the US are due in the second half – on Thursday we will receive the advance goods trade report and durable good’s orders data for June, while Friday brings the first estimate of Q2 GDP. After a relatively modest increase in GDP at the start of the year of 2.0 percent q/q annualised, expectations are for a sharp acceleration. Indeed, a reading  of 4-1/2 percent q/q annualised, which would be consistent with the latest Atlanta Fed GDP now estimate, would not be a big surprise, although calculations of other regional Feds, New York and St Louis, suggest somewhat more moderate increases, Daiwa Capital Markets reported.

Lastly, the first half of the week will be dominated by housing market data. Existing home sales figures are due today, with the FHFA price indices out tomorrow and new homes sales on Wednesday. Survey data will be watched too: tomorrow’s preliminary PMIs and Friday’s University of Michigan consumer confidence indices will provide an update on changes in economic sentiment at the start of Q3.           

Meanwhile, the S&P 500 Futures remained 0.07 percent lower at 2,798.50 by 11:20GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bearish at -162.07 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex