European bonds await U.S.-China trade talk progress

• Risky assets got some help overnight with Wall Street indices reaching a record high.
• U.S. Treasury yields were also lower, with benchmark 10-year yields last at 1.741pc, down from 1.79pc on Monday.
• Benchmark German 10-year bond yields were flat at -0.377pc, holding above a November low of -0.384pc.

LONDON: Core European government debt was steady on Wednesday, with yields on benchmark German 10-year bonds holding above one-month lows.

Risky assets got some help overnight with Wall Street indices reaching a record high, and safe-haven government bonds saw some demand as investors waited for progress in trade talks.

The United States and China are close to agreement on the first phase of a trade deal, U.S. President Donald Trump said on Tuesday, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

Trump said Washington was in the "final throes" of work on a deal that would end a 16-month trade war with Beijing, but he also reiterated Washington's support for protesters in Hong Kong, a huge sore point with China.

"Markets were awaiting a breakthrough in trade talks in November, and we are almost at the end of the month and not seeing any significant breakthrough and that is keeping bonds supported," said Rene Albrecht, a rates strategist at DZ Bank in Frankfurt.

Benchmark German 10-year bond yields were flat at -0.377pc, holding above a November low of -0.384pc.

U.S. Treasury yields were also lower, with benchmark 10-year yields last at 1.741pc, down from 1.79pc on Monday.

Month- and year-end portfolio rebalancing helped support demand for U.S. bonds.

In keeping with the broader trend of tiny price moves across asset markets -- overall currency market volatility is at a record low -- U.S. Treasury bond volatility is at its lowest level in four months.

The data calendar is relatively thin with only U.S. inflation, a revision of U.S. third-quarter growth and the Fed's Beige Book survey out later in the session.