July 24, 2019 / 1:30 PM / a month ago

TREASURIES-Yields fall as European data shows sluggish global economy

    * European business growth weaker than expected
    * Mnuchin says he will travel to China for trade talks
    * Treasury to sell $41 billion in five-year notes

    By Karen Brettell
    NEW YORK, July 24 (Reuters) - U.S. Treasuries yields fell on
Wednesday in line with yield declines in European government
debt, after weak economic data in the region added to
expectations that the European Central Bank will ease monetary
policy.
    Euro zone business growth was weaker than expected in July,
hampered by a deepening contraction in manufacturing, and
forward-looking indicators in surveys published on Wednesday
suggest conditions will get worse next month.             
    A recession in Germany's manufacturing sector worsened in
July while French business growth also slowed unexpectedly in
the month.                          
    "Treasuries are following bunds here to lower yields," said
Justin Lederer, an interest rate strategist at Cantor Fitzgerald
in New York.
    The weak economic figures "continue to show the concerns on
global growth, and in general the concerns that the global
central banks are going to have to look at in the next week with
the ECB and the Fed," Lederer said.
    The ECB is expected to signal easier policy when it meets on
Thursday.             
    The U.S. Federal Reserve is seen as certain to cut its
overnight benchmark lending rate at its July 30-31 policy
meeting, with a 25-basis-point cut viewed as more likely than a
50-basis-point reduction.
    Benchmark 10-year Treasury yields             gained 6/32 in
price to yield 2.053%, down from 2.074% on Tuesday.
    Yields had risen overnight after a report that U.S.
negotiators are heading to China to discuss trade terms boosted
hopes the two countries may deescalate a trade war that has
weighed on economic growth.
    U.S. Trade Representative Robert Lighthizer and senior U.S.
officials will travel to Shanghai on Monday for face-to-face
trade meetings with Chinese officials, Bloomberg reported on
Tuesday.             
    U.S. Treasury Secretary Steven Mnuchin on Wednesday
confirmed he and Lighthizer would depart for China on Monday.
            
    The Treasury Department will sell $41 billion in five-year
notes on Wednesday, the second sale of $113 billion in short and
intermediate-dated notes this week.
    The government sold $40 billion in two-year notes to soft
demand on Tuesday.                         
    It will also sell $32 billion in seven-year notes on
Thursday. 

 (Editing by Paul Simao)
  
 
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