Treasury yields rise after Fed hikes rates for the fourth time in 2018

U.S. government debt yields climbed higher on Thursday as investors digested the fourth rate hike this year from the U.S. Federal Reserve.

The yield on the two-year Treasury bond, the coupon maturity most sensitive to Fed policy expectations, rose four basis points to 2.6706 percent, while the benchmark 10-year Treasury note was two basis points higher at 2.7944 percent. Bond yields move inversely to prices.

On Wednesday, the Fed announced an increase in its benchmark interest rate by a quarter point to a target range between 2.25 to 2.5 percent, in a widely anticipated move.

The move marked the fourth increase this year by the U.S. central bank and the ninth since it began normalizing rates in December 2015. It came despite President Donald Trump’s tweets against rate hikes. On Monday, he said “it is incredible” that “the Fed is even considering yet another interest rate hike” amid the turmoil outside of the U.S.

On the data front, investors are likely to closely monitor Philly Fed manufacturing figures for December at around 8:30 a.m. ET, with the latest jobless claims data scheduled for publication at the same time.

Meanwhile, a four-week and an eight-week bill is set to be auctioned by the Treasury on Thursday. Announcements on three-month, six-month, two-year, five-year and seven-year notes are also expected.

Japan leads declines amid broad slip in Asian stocks

Stocks in Asia were broadly lower on Friday, with Japanese equities leading the fall.

The Nikkei 225 fell 1.11 percent on the day as it closed at 20,166.19, while the Topix index declined by 1.91 percent to finish its trading week at 1,488.19. The benchmark Nikkei 225 dropped more than 2.5 percent in the previous trading session.

Shares of Japanese banks fell on the back of the Bank of Japan’s decision on Thursday to keep interest rate targets unchanged. Mitsubishi UFJ Financial Group shed 2.22 percent while Sumitomo Mitsui Financial Group dropped 2.21 percent. Japanese banks have suffered as a result of the central bank’s loose monetary policy, which has had the side effect of impacting the revenues of the country’s lenders.

Over in South Korea, the Kospi recovered from earlier losses to close slightly higher at 2,061.49 — up 0.07 percent.

In Australia, the ASX 200 lost its earlier gains to close 0.69 percent lower at 5,467.6, with most sectors slipping. Shares of the country’s so-called Big Four banks declined, with Australia and New Zealand Banking Group, Westpac and National Australia Bank all seeing declines of at least 1 percent.

Chinese hackers charged

The mainland Chinese markets, closely watched in relation with Beijing’s trade spat with Washington, slipped on the day. The Shanghai compositedeclined by 0.79 percent to close at around 2,516.25 and the Shenzhen composite lost 0.959 percent to end its trading week at about 1,284.66.

Hong Kong’s Hang Seng index recovered from its earlier losses to trade up by about 0.32 percent, as of its final hour of trade.

On Thursday, the U.S. Justice Department announced charges against two Chinese nationals for being part of a global hacking campaign. The two individuals, Zhu Hua and Zhang Shilong, are charged with conspiring to commit computer intrusions and wire fraud, as well as aggravated identity theft. It was part of campaigns that lasted for years, as they sought to steal from several foreign governments and dozens of companies. The two men remain at large.

Prosecutors also accused the two of operating in conjunction with the Chinese government.

“China will find it difficult to pretend that it is not responsible for this action,” Deputy Attorney General Rod Rosenstein said at a press conference.

“I think it’s important to see these accusations as just the latest, really, in a series of moves by the Trump administration in recent months to frankly, apply more pressure to China across the board,” Michael Fuchs, senior fellow at Center for American Progress, told CNBC’s “Squawk Box” on Friday.

Treasury yields fall as Chinese data disappoints; traders look to Fed meeting

U.S. government debt yields fell on Friday as traders digested fresh economic data out of China and looked ahead to next week’s Federal Reserve meeting.

The yield on the benchmark 10-year Treasury note fell steeply to 2.895 percent, while the yield on the 30-year Treasury bond dropped to 3.152 percent. Bond yields move inversely to prices.

China’s industrial output in November grew 5.4 percent from the previous year, less than the 5.9 percent estimated by Reuters; retail sales, meanwhile, rose 8.1 percent last month, falling short of an expected 8.8 percent.

News of the disappointing figures comes as China and the U.S. try to negotiate a trade deal within a 90-day tariffs truce. Positive headlines around trade relations between the two had buoyed market sentiment earlier this week.

President Donald Trump said discussions with Beijing had been “very productive” and that some “important announcements” were forthcoming, while a Wall Street Journal report said China was preparing to widen foreign access to its economy.

Meanwhile, traders are anticipating the latest meeting of the Federal Open Market Committee (FOMC) next week, where the central bank sets interest rates. The Fed is largely expected to raise rates at the Dec. 18-19 meeting, however expectations for how many times — or if at all — the bank will hike rates next year have dampened amid worries around a potential slowdown in economic growth.

In other news, the European Central Bank on Thursday said it was to formally end its vast quantitative easing program. The institution will bring its bond purchases down from 15 billion euros per month to zero. The ECB, however, said it would continue to reinvest cash from maturing bonds for an extended period of time.

On the data front, investors are likely to closely monitor retail sales figures for November at around 8:30 a.m. ET. Industrial production data for November and manufacturing and services PMI data for December is scheduled to follow later in the session.