Treasury yields inch lower

US Treasury yields edged lower on Thursday amid uncertainty ahead of a key US jobs report Friday and a meeting between US President Donald Trump and Chinese President Xi Jinping, and also over the fate of Trump's pro-growth agenda. Yields on Treasuries maturing between two and seven years hovered two to three basis points above multi-week lows touched earlier in the week before these events. The meeting between Trump and Xi Thursday will be their first. On jobs, economists polled by Reuters expect US employers to have added 180,000 jobs last month.
"People are very careful about positioning ahead of payrolls," said Subadra Rajappa, head of US rates strategy at SG Corporate & Investment Banking in New York. She said yields could fall on a weak report, while stronger average hourly earnings could push yields higher by lifting expectations for a June interest rate increase from the Federal Reserve. Analysts said comments on Wednesday by US House of Representatives Speaker Paul Ryan stoked concerns over the feasibility of Trump's agenda, in turn driving a bid for safe-haven US government debt that prevented yields from rising.
Ryan said tax reform would take longer to accomplish than repealing and replacing the Affordable Care Act, known as Obamacare, and that Congress and the White House were initially closer to agreement on healthcare legislation than on tax policy. "Ryan saying tax reform was going to potentially take longer, that is pretty much just opening up the possibility that the first 100 days of Trump's presidency is not going to see any material actionable planning being done," said Stanley Sun, interest rate strategist at Nomura Securities International in New York.
Traders also digested minutes from the Fed's March meeting released Wednesday afternoon, which showed most Fed policymakers think the US central bank should take steps to begin trimming its $4.5 trillion balance sheet this year as long as economic data holds up.
Benchmark 10-year Treasury notes were last up 4/32 in price to yield 2.343 percent, from a yield of 2.357 percent late Wednesday. US 30-year Treasury bonds were last up 9/32 in price to yield 2.990 percent, from a yield of 3.005 percent late Wednesday. US three-year yields were last roughly flat at 1.448 percent after touching a more than five-week low of 1.426 percent Wednesday.