Bonds: US interest rate curve flattens as 'big short' position capitulates

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 2.91% (-6bp)

UK: 1.28% (-3bp)

Germany: 0.26% (-4bp)

France: 0.67% (-3bp)

Spain: 1.49% (-1bp)

Italy: 3.1% (+1bp)

Portugal: 1.81% (+1bp)

Greece: 4.24% (+3bp)

Portugal: 1.81% (+1bp)

Japan: 0.07% (-1bp)

The US interest rate curve flattened sharply on Tuesday, prompting some 'market chatter' that the market was sending a signal of economic weakness and of a so-called 'capitulation' as traders supposedly gave up on the near-term chances of another push higher in rates before 2018 was out.

According to Bloomberg TV's Jonathan Ferro, it was the capitulation of a "big" short position which had sent the long end lower.

To take note of, just the day before Federal Reserve governor, Lael Brainard, had noted a recent spike in bond trading near the end of each session.

According to Brainard, it was not clear if the market "could handle" a large sale late in the day.

Yields on the benchmark 10-year US Treasury note fell by six basis points to 2.91%, dropping below their 200-day moving average and hitting an intra-session low of 2.88%, while those on two-year notes were off by two basis points at 2.80%.

Those moves pushed the closely tracked spread between the two to just 10 basis points at one point during the session.

In the background meanwhile, market commentary was focusing on the apparent disparities between official statements from Beijing and Washington around the result of the trade talks which took place in Buenos Aires, Argentina, at the weekend, despite the fact that several officials from the US side appeared to be singing largely off the same hymn sheet.

Nevertheless, Bonnie Glaser from the Center for Strategic and International Studies think-tank told CNN that the disparity around how the 90-day deadline around the ceasefire negotiated between the US and China was being reported on on either side of the Pacific showed that there was "a lot of room for misunderstanding".

"I think that there's still enormous uncertainty about what the outcome of these negotiations will be," she reportedly said.