Treasury yields fall as investors watch stimulus talks, jobs data and U.S.-China tensions

U.S. government debt prices fluctuated Thursday morning as optimism over a fresh government coronavirus response bill failed to offset concerns over rising tensions between the U.S. and China.

At around 2:15 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at 0.5905% and the yield on the 30-year Treasury bond fell to 1.2848%. Yields move inversely to prices.

U.S. jobless claims data for the week ended July 17 will be in the spotlight Thursday and will be released at 8:30 a.m. ET. Economists expect another 1.3 million workers to have filed initial claims for state unemployment benefits last week.

Senate Republicans late on Wednesday said they had reached accords in principle over portions of a potential aid package, which may be presented to Democratic counterparts this week as lawmakers look to rush legislation through before the end of the month.

CNBC reported Wednesday, citing sources, that Republicans are considering an extension of unemployment insurance benefits through to year-end, at a dramatically reduced level of $400 per month.

The positive sounds around the bill helped pull yields away from Wednesday’s lows, which came after a further souring of diplomatic ties between the world’s two largest economies. The U.S. has given China 72 hours to close its consulate in Houston amid allegations that it was a hotbed for spying.

Chinese foreign ministry spokesperson Wang Wenbin condemned the action and warned of unspecified retaliation if Washington does not reverse the decision.

The coronavirus pandemic remains on the agenda as Texas on Wednesday reported record daily increases in deaths and hospitalizations, while the head of the World Health Organization’s emergency program said the first use of vaccines currently advancing through testing cannot be expected until early 2021.

Pfizer and German biotech BioNTech said on Wednesday that the U.S. has agreed to pay $1.95 billion for its experimental Covid-19 vaccination in the hope of inoculating around 50 million people, should it prove to be safe and effective.

Auctions will be held Thursday for $30 billion of 4-week Treasury bills, $35 billion of 8-week bills and $14 billion of 10-year TIPS.