"The market is at this point really heavily influenced, if not totally driven, by headlines related to Brexit and whether or not it looks like a deal is on," said Thomas Simons, a money market economist at Jefferies in New York. Optimism that the deal will go through boosted risk sentiment earlier on Thursday, sending stocks higher and reducing demand for safe haven US debt, which sent yields higher.
Yields came down from session highs, however, as doubts about the deal's passage grew. Benchmark 10-year note yields were little changed on the day at 1.743%, after earlier rising as high as 1.799%, a level last reached on Sept. 19. Investors are also focused on the likelihood that the United States and China will reach a deal to end their protracted trade war, which has been blamed for harming global growth.
China hopes to reach a phased agreement and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars have no winners. US data on Thursday added to concerns about a slowing US economy, with a deceleration in factory activity in the mid-Atlantic region in October. US homebuilding also fell from a more than a 12-year high in September.
It comes after data on Wednesday showed that US retail sales fell for the first time in seven months in September. The Federal Reserve is expected to cut rates when it meets on Oct. 29-30, though Fed policymakers are divided on whether further cuts are needed for the economy.