NEW YORK: US Treasury prices rose on Thursday as weak Chinese data pushed investors to buy safe-haven government debt after two straight days of selling.
China's exports fell 10 percent for September from a year earlier, far worse than the 3 percent fall expected, and imports unexpectedly shrank, suggesting an apparent recovery in the world's second-largest economy may not be materializing.
Market participants were also looking to a 30-year bond auction later in the day at which the US government will re-open $12 billion worth of supply.
The 10-year note rose 11/32 in price to yield 1.737 percent, down 4 basis points from late Wednesday and at nearly a one-week low. The 30-year bond rose 26/32 in price to yield 2.468 percent, its lowest since Oct. 7.
Prices gained further after the opening of the US stock market as the Dow, S&P 500 and Nasdaq each fell close to 1 percent.
British and German 10- and 30-year government bonds saw similar gains in prices after the Chinese data with Japanese government bonds up modestly as global bond prices in developed markets seemed to move largely in step with one another.
"The big story is a little bit more of a global one today," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. "As much as we were following rates higher yesterday due to global factors we're following them lower today."
The bid for Treasuries may also have been a result of selling over the past two days, Goldberg said. After the Treasury market closed for the Columbus Day holiday on Monday, Treasury yields rose across the board on both Tuesday and Wednesday with benchmark 10-year yields moving above 1.80 percent for the first time in four months in early Wednesday trading.
Volumes were fairly light ahead of Thursday's bond auction as investors also look to Friday's US retail sales data and a speech from Federal Reserve Chair Janet Yellen.
Fed fund futures prices show investors see nearly a 70-percent chance the Fed will raise rates at least once this year, with traders overwhelmingly positioned for a December, rather than November, hike.
"It's a fairly quiet day. Besides the auction there's not a whole lot to watch," Goldberg said. "I think people are still waiting for retail sales and Yellen tomorrow to actually give the market a little more direction."
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