Treasuries Rally Stalls as Trade and Credit Concerns Recede

Group 1 - A rally in Treasuries was influenced by concerns regarding US regional bank credit exposures and trade tensions, but stabilized after comments from US President Trump about tariffs on China [1] - Benchmark yields increased by as much as five basis points after initially declining, reflecting a rebound in US stocks following Trump's interview [1] - Economists noted a decline in new claims for unemployment insurance benefits, indicating labor-market strength, despite the ongoing US government shutdown affecting national data [2] Group 2 - Interest-rate strategists observed a continued slip in market pricing for growth expectations, despite the lack of key data, and advised against chasing lower yields [3] - The yield on the 10-year note fell below 4%, leading JPMorgan Chase & Co. to revise their tactical recommendation due to the risk of further declines in yields [3] - A surge in open-interest in bullish options on 10-year notes highlighted the risk associated with this trend [3] Group 3 - The disclosure of problem loans by two US regional banks led to a decline in yields, prompting global investors to seek safe-haven assets [4] - However, shares of the affected banks rebounded, reducing the demand for safe-haven investments [4] Group 4 - European and UK government bonds followed the trend set by Treasuries, with German 10-year yields dropping to 2.52%, the lowest since June [5] - UK two- and 10-year yields also fell by as much as five basis points, reaching 3.80% and 4.45% respectively [5] Group 5 - The issues faced by US regional banks reinforced expectations for two additional quarter-point interest rate cuts by the Federal Reserve this year, amid concerns over the job market due to the government shutdown [6] - Traders increased their bets on interest-rate cuts, pricing in as many as five quarter-point reductions by the end of next year, with a 30% chance of a sixth cut [6]