Treasurys

With debt offices slashing sales of longer-maturity debt, the recent drop in 30-year bond yields is likely to run further.

Yields on 10-year notes rose two basis points to 3.99% after falling the previous two sessions, while monetary policy-sensitive two-year notes held steady around 3.49% Wednesday morning.

Yields on 10-year benchmark US government bonds rose as much as four basis points to 4.04%, the highest in more than a week, after negotiators from the world's two biggest economies said they'd struck a series of agreements on issues.

The consumer price index for September — delayed by the federal government shutdown — showed core prices rose 0.2% on a monthly basis, less than the 0.3% expected.

Traders are shifting their focus to Friday's release of the consumer price index, the first real glimpse on the state of the economy since the start of the US government shutdown.

The department has been increasing the supply of bills — Treasury securities that mature in a year or less — in a way that means the federal government needs to carry a larger checking-account balance.

Treasuries have rallied since the flare-up in trade talks prompted renewed demand for U.S. government debt as a haven.

After an apparent truce, the US and China are back to making tit-for-tat trade swipes. Market participants are fretting more about the potential impact on growth than how the protectionist measures will affect inflation.

While the shutdown has delayed the release of federally-compiled statistics, economists at Citigroup Inc. and Goldman Sachs Group said state-level data suggested initial jobless claims increased last week.

Over the past two years, volume in the $30 trillion US government bond market was about 58% higher than average on the last trading day of the month, the New York Fed found.