There seems to be a relationship between President Donald Trump’s messages in regard to the United States and China nearing a trade deal and the US financial markets. Where it appears that the U.S. and China are close to making a trade deal, the stock market moves up and Treasury yields also rise. Treasury yields typically react concurrently with the stock market because many people pull money from conservative bond investments and move their funds into equities when there is positive news. According to a 12/12 article in Bloomberg written by Jenny Leonard, Jennifer Jacobs, Saleha Mohsin, and Shawn Donnan, “President Donald Trump signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter.” The article also mentioned how,
“U.S. stocks rose to records earlier Thursday as optimism grew that there would be a deal. Trump tweeted that the U.S. and China are “VERY close” to signing a “BIG” trade deal, sending equities higher.”
The benchmark US 10-year treasury (US10Y) closed today at 1.89%.