Bessent Optimistic on US – China Trade Talks

Yields close nearly flat. UST yields rose ~3 bps in the morning in a slight reversal of yesterday’s move, where rates closed 5-7 lower across the curve. In the afternoon, yields declined to opening levels and traded in a 1bp range for the remainder of the session. The 2-year yield ultimately closed nearly unchanged at 3.54%, while the 10-year yield ended less than 2 bps lower at 4.08%. Meanwhile, volatility is expected to remain muted tomorrow with nonfarm payrolls likely to be postponed due to the US government shutdown. Elsewhere, equities rallied today, with the NASDAQ closing at a record high of 22,844.05 on strength in AI names.

Bessent predicts trade breakthrough with China in next round of talks. Treasury Secretary Scott Bessent said in an interview today that he foresees a “breakthrough” coming in the next round of trade negotiations with China, which will be the 5th round of talks between him and Chinese Vice Premier He. Bessent said that American farmers can expect good news, a positive sign after China boycotted U.S. soybean imports only a short time after the two countries announced a tariff truce on technology and rare earth minerals. China has not bought a single shipment of soybeans from this year’s harvest, an impact that American farmers have felt acutely given that China accounted for 52% of exports over the last five years. Senator John Hoeven (R-ND) said, “We are concerned that the Chinese are really going to the South American market and cutting out our farmers. But they’re doing that on purpose as leverage in this negotiation regarding tariffs.” President Trump took to social media to back the farmers and suggested that tariff revenue could be redirected to support them in the interim.

White House withdraws nomination of BLS replacement. In early August, President Trump fired the chief of the Bureau of Labor Statistics, Erika McEntarfer, questioning the validity of the department’s data under her leadership. He then nominated EJ Antoni, the chief economist of the Heritage Foundation, to fill her spot. His nomination faced mixed reactions, with some eager to see the changes he would bring to the BLS, and others questioning his qualifications. On Tuesday night, the White House withdrew his nomination, although they did not cite a specific reason why. In a statement, the White House said Antoni was a “brilliant economist,” and that President Trump would select a new nominee shortly.