Treasury yields slip

US Treasury yields fell on Thursday on worries about a continuing US trade battle with China that prompted German carmaker Daimler AG to cut its 2018 profit forecast, and as US data fell below expectations. Benchmark US 10-year note and 30-year bond yields have fallen in two of the last three sessions as US-China trade tensions increased.
On Tuesday, President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods while Beijing warned it would fight back. "It's another safe-haven bid for Treasuries given the trade jitters and concerns about Italy," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.
Daimler said late Wednesday that tariffs on US car imports to China would hurt sales of its Mercedes-Benz models. Rival German carmaker BMW said on Thursday it was looking at "strategic options" because of the trade war.
Italy, the third largest euro zone economy, also weighed on US yields after the country's government appointed two euroskeptics to head key finance committees. In afternoon trading, US 10-year yields fell to 2.904 percent, from Wednesday's 2.928 percent.
Ian Lyngen, head of US rates strategy at BMO Capital, said the 10-year yield is up against the 74-day moving average of 2.91 percent, which has proven to be a "focal point" rather than the breakout trigger that he initially envisioned. US 30-year yields slid to 3.05 percent, compared with 3.064 percent on Wednesday.
On the short end, US two-year note yields slipped to 2.545 percent, from 2.562 percent late on Thursday. Italy's 10-year government bond yield rose to a one-week high of 2.72 percent, while two-year borrowing costs rose to 0.84 percent.
A US mid-Atlantic business survey for June came in below expectations, while a weekly report on jobless claims showed mixed results. The Philadelphia Fed business conditions index fell to 19.9, compared with expectations for a 29.0 reading. The index was at 34.4 in May.
US initial jobless claims dropped 3,000 to a seasonally adjusted 218,000 for the week ended June 16. However, claims data for the prior week was revised to show 3,000 more applications received than previously reported. As trade issues linger, investors will be looking at bond supply next week for clues about the market's direction.
The US Treasury said on Thursday it would sell $100 billion of securities next week, including $34 billion of 2-year notes on Tuesday, $36 billion of five-year notes on Wednesday, and $30 billion of seven-year notes on Thursday.