July 18, 2025
Treasury yields end lower after soft China data underscores global risks

Treasury yields end lower after soft China data underscores global risks

Treasury yields are steady as soft China data highlights risks to global economy – MarketWatch

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Bond Report

Last Updated: July 17, 2023 at 3:42 p.m. ET First Published: July 17, 2023 at 5:57 a.m. ET

[]Rates on U.S. government debt finished slightly lower on Monday after weak growth data from China raised concerns about a slowing global economy.

What happened

  • The yield on the 2-year Treasury TMUBMUSD02Y, 4.691% slipped 1.7 basis points to 4.732% from 4.749% on Friday. The yield is down five of the past seven trading days, based on 3 p.m. Eastern time figures from Dow Jones Market Data. Yields move in the opposite direction to prices.
  • The yield on the 10-year Treasury TMUBMUSD10Y, 3.758% declined 2.2 basis points to 3.796% from 3.818% as of Friday afternoon. The 10-year yield is down five of the past six trading sessions.
  • The yield on the 30-year Treasury TMUBMUSD30Y, 3.891% was marginally lower at 3.922% versus 3.923% late Friday.

What drove markets

[]Yields slipped after softer-than-expected China growth data raised questions about the state of the global economy.

[]With China’s factory-gate prices already deep in deflationary territory, the prospect of reduced demand means the world’s second-biggest economy may help reduce goods inflation in developed nations, potentially assisting central banks in their battles against consumer-price pressures.

[]However, China’s data is also raising worries about growth prospects for the U.S., with the eurozone having slipped into a recession earlier this year. In an interview Monday with Bloomberg Television, Treasury Secretary Janet Yellen said she does not expect the U.S. economy to fall into a downturn.

[]In U.S. economic releases on Monday, the New York Federal Reserve Bank’s business-conditions index, a gauge of manufacturing activity in the state, fell 5.5 points in July, to 1.1.

[]Markets were pricing in a 97.3% probability that the Fed will raise interest rates by 25 basis points to a range of 5.25%-5.5% on July 26, according to the CME FedWatch Tool. The chance of a similar or bigger move by November was seen at 28.3%.

[]The central bank is expected to take its fed-funds rate target back down to around 5% or lower next year.

What analysts are saying

[]“The market is debating whether the U.S. economy will slow — we provide evidence that U.S. activity has already slowed,” said Steve Englander, head of global G-10 FX research and North America macro strategy at Standard Chartered Bank’s New York branch. “Data from the income side are much weaker than standard GDP calculations based on demand … as was the case in the runups to the 1990 and 2008 recessions.”

[]In his note, Englander continued: “We also look at daily data on withholding taxes and [unemployment-insurance] benefits that point to a weaker labor market than [nonfarm payrolls]. Not a big ‘R’ recession to set your hair on fire, but looks like there is sluggishness in the air. This will drive [the U.S. dollar] and yields further lower.”

S&P 500, Nasdaq end at 15-month highs as Dow rises for sixth straight day ahead of busy week of earnings

[]U.S. stocks finish higher on Monday, despite disappointing news on China’s economy.

[]Vivien Lou Chen is a Markets Reporter for MarketWatch. You can follow her on Twitter @vivienlouchen.

[]Jamie Chisholm is a markets reporter based in London.

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