U.S. government debt yields held steady on Thursday as investors grappled with new concerns over China’s economy and Brexit uncertainty.
On Wednesday, China’s central bank made its biggest ever daily net cash injection via reverse repo operations, pumping $82.73 billion into the banking system. The news came after comments from the Chinese state planner and Premier Li Keqiang suggested the country would inject more stimulus amid concerns of a slowdown in economic growth.
Such concerns appeared to weigh on investor sentiment Thursday. Recent data has shown signs of weakness in China’s economy, a sensitive issue as Beijing tries to resolve its trade dispute with the Trump administration over the course of a 90-day tariffs truce. The two countries have targeted each other’s economies with new duties on billions of dollars’ worth of imports.
Also weighing on investor sentiment is continued uncertainty surrounding Brexit after British Prime Minister Theresa May’s divorce deal was voted down by Parliament earlier this week. The government survived a no-confidence vote on Wednesday, albeit by a slim margin of 19 votes.
May has said she will now discuss options with lawmakers from different parties, although she has pointedly not been in direct contact with opposition leader Jeremy Corbyn.
In other political news, the partial U.S. government shutdown has now entered its 27th day. The shutdown is the result of a standoff between Democrats and the Trump administration over the president’s proposed U.S.-Mexico border wall. It is the longest government shutdown on record.
In terms of data, weekly jobless claims and Philadelphia Fed manufacturing figures are due at 8:30 a.m. ET.
Meanwhile, $40 billion in four-week Treasury bills, $30 billion in eight-week bills and $13 billion in 10-year Treasury Inflation-Protected Securities (TIPS) are set to go on auction Thursday.