US Treasury prices rallied behind European bonds as risk-off trading resumed Wednesday after the US-China trade complications returned to center stage. Global bonds pushed higher as a run of weak Chinese economic data hit overnight, but prices backed off the highest levels.

Europe was leading with the UK Gilt yield off 6 basis points near 1.044%, and the German Bund rate down 4.6 bps to -0.118%. Treasury yields were 3.5 to 5 bps lower with the 10-year yield near 2.378% versus 2.373% overnight and 2.419% Tuesday. The 2-year yield was near the high at 2.166% from a 2.21% close.

Equities slumped in Europe with spillover to the US after gains in Asia. The market was pushed along after weak Chinese retail sales, which hit a 16-year low, and moderation in industrial production, along with disappointing earnings news out of Europe, and budget concerns from Italy. Chinese shares overcame the data miss thanks to expectations the slowing in growth will force more stimulus measures.

Meanwhile, gross domestic product (GDP) growth accelerated in Germany and Europe, each posting GDP growth of 0.4%.

The weekly Mortgage Bankers’ Association reported mortgage applications fell 0.6% in the week of May 10 .

The top-tier April retail sales and mid-tier May Empire State manufacturing numbers are both out at 8:30 am ET. The April industrial production and capacity utilization data are due at 9:15 am.

The March business inventories and National Association of Home Builders’ housing market index are on at 10 am. The March Treasury International Capital flows data are due at 4 pm.

Federal Reserve speakers include Vice Chair for Supervision Randal Quarles testifying before the Senate Banking Committee at 9:30 am, with Richmond President Thomas Barkin speaking on the economy at 1 pm with a following Q&A.