March 22, 2018 / 1:13 PM / 9 months ago

TREASURIES-Trade war fears boosts demand for Treasuries

* Trump set to announce China tariffs on Thursday

* Bank of England keeps rates steady

By Karen Brettell

NEW YORK, March 22 (Reuters) - U.S. Treasury prices gained on Thursday on rising risk aversion as President Donald Trump was poised to announce tariffs on Chinese imports, intensifying concerns about a global trade war.

There was no indication of the size and scope of the tariffs to be announced on Thursday, which would target China’s high-technology sector and could impose limits on Chinese investments in the United States. Other sectors like apparel could also be hit.

“I think it’s related to the risk off that we’re seeing in anticipation of what Trump has up his sleeve on new China sanctions or China tariffs,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. “There seems to be too much uncertainly about what all these trade tariffs are going to lead to.”

Benchmark 10-year notes gained 18/32 in price to yield 2.843 percent, down from 2.907 percent on Wednesday. The yield curve between two-year and 10-year notes flattened to 54 basis points from 58 basis points.

Declining stocks boosted demand for lower risk bonds.

Concerns about a more hawkish Federal Reserve also eased after the U.S. central bank on Wednesday raised interest rates and forecast two more hikes for 2018, instead of the three that many market participants had expected.

Policymakers were largely split as to whether a total of three or four rate hikes would be needed this year in their rate projections, known as the “dot plot” because the outlooks are plotted on a chart.

The Bank of England kept rates steady on Thursday but two of its policymakers unexpectedly voted for an immediate rate rise, in a statement that will boost investors’ confidence that borrowing costs will rise in May. (Editing by Bernadette Baum) )

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