US Treasury yields fell to two-week lows on Tuesday, as risk appetite continued to fade after weak consumer confidence data and President Donald Trump's sharp comments on China amid the two countries' trade negotiations.
The decline in yields came after a recent rise that took benchmark US 10-year yields to a five-week high near 2.0%. The US 10-year note and 30-year bond yields slid for a seventh straight session on Tuesday, while those on two-year notes have dropped for four consecutive days.
US yields extended their decline after data showed a drop
in consumer confidence in September to a reading of 125.1, from a downwardly revised 134.2 in August as persistent trade tensions worried consumers, possibly weighing on their spending.
At the same time, Trump kept trade tensions with China boiling on Tuesday, saying at the United Nations General Assembly that he would not accept a "bad deal" in trade negotiations with the world's second largest economy.
"The day's first major surprise was the 10-point decline in Conference Board's consumer confidence, the largest monthly percentage decline that indicator since late 2013," said Jim Vogel, senior rates strategist at FTN Financial in Memphis, Tennessee.
"Next, the president's recycled rhetoric at the UN targeting China on trade deflated some optimism momentum into the next round of scheduled US-China talks," he added.
Further adding to risk aversion in the market is the growing call for Trump's impeachment, as he confirmed he had withheld nearly $400 million in US aid to Ukraine. Trump denied, however, that he did so as leverage to get its the Ukrainian president to initiate an investigation that would damage Democratic political rival Joe Biden.
In afternoon trading, US 10-year note yields fell to 1.662% from 1.708% late on Monday, after earlier touching a two-week low of 1.642%.
Yields on 30-year bonds were also lower at 2.113%, from 2.153% on Monday. Earlier in the global session, 30-year yields dropped to two-week toughs of 2.097%.
US two-year yields were down at 1.636%, from Monday's 1.669%, hitting a two-week low of 1.611% earlier.
The Treasury's two-year note auction was well-received. The offering stopped at 1.612%, lower than the expected yield at the bid deadline.
Indirect bidders, which include foreign central banks, took 57.0%, also much better than August's 47.1% and the 47.0% average. Tuesday's auction was strongest take down by indirect buyers since January 2018.
"Revived worries over trade, geopolitics, and growth, not to mention the drop on Wall Street amid impeachment talk, may have supported a safety bid, even as the market richened," said Action Economics in its blog right after auction.
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