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NEW YORK: US Treasury yields climbed to 1-1/2 week highs on Wednesday as hopes for a trade deal between China and the United States and a breakthrough for Brexit touched off a sell-off in the bond market.

Encouraging data in China and Europe soothed some worries about a global economic slowdown, reducing the safe-haven appeal of low-yield US government debt.

Weaker-than-forecast figures on US private jobs growth and services industry activities limited the selling in Treasuries.

“The market is looking for direction right now. People are waiting for the next shoe to drop,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co in New


At 10:42 a.m. (1442 GMT), the yields on benchmark 10-year Treasury notes were 2.5062%, up 0.03 percentage point from Tuesday. They hit a 1-1/2 week peak of 2.524% earlier Wednesday.

Their premium over three-month bill rates grew to 8 basis points from more than 4 basis points late on Tuesday.

Last Thursday, 10-year yields fell below three-month rates for the first time since 2007, stoking fears of a recession. This inversion between the two yields preceded every economic downturn in the past 50 years.

For now, those fears were replaced by traders’ optimism for a successful outcome in the latest round of trade talks between senior White House and Beijing officials.

A possible end to the trade fight between the world’s two biggest economies will likely bolster stock prices and put more upward pressure on bond yields, traders and analysts said.

“If they could cut a deal, that would be positive for risky assets,” Milstein said.

A meeting between UK Prime Minister Theresa May and opposition leader Jeremy Corbyn fed hopes for a breakthrough to reach a parliamentary approval of a deal for an orderly exit for Britain from the European Union.

In addition to those developments, upbeat overseas data lifted investor sentiment.

The Caixin/Markit services purchasing managers’ index (PMI) rose to 54.4, the highest since January 2018.

Euro zone retail sales increased 0.4 percent in February, more than the 0.2 percent gain forecast among analysts polled by Reuters.

Wednesday’s data on the US economy, however, were dour by comparison.

The Institute for Supply Management said its index on activity among US services industries fell to a 1-1/2 year low in March, while ADP reported the private sector added 129,000 workers last month, the fewest since September 2017.


Large Taxpayers Unit (LTU), Karachi has recovered Rs170 million from Foreign Harbor Engineering Company after the attachment of bank accounts. The said company had defaulted Rs. 515.45 million for tax year 2013 and despite several notices, the company failed to pay the amount in time and also went into appeal against the LTU that restrained the field formation to recover the said amount, pending since 2013.

As the commissioner appeal has decided the case in favor of LTU, the tax department under the directives of Chief Commissioner Dr. Faiz Illahi Memon issued a notice under section 140 of the Income Tax Ordinance, 2001, directing the private bank to attach all bank accounts of the company. Sources in LTU confirmed the tax recovery of Rs. 170 million, following the attachment of bank accounts.

They said that the tax team of Foreign Harbor Engineering Company had approached the LTU and requested to allow more time for paying rest of the amount but the plea was declined.

Sources said that LTU would not detach the bank accounts of the company till the recovery of rest of the pending dues. Replying to a question, sources said that all bank accounts would be detached as company was planning to approach the court for stay order on April 4, 2019 (today).