The U.S. Treasuries traded mixed on Monday after crude oil prices slide more than 1 percent intra-day on rising US crude inventories, a stronger dollar and surging output from Iran to Europe and Asia. Also, hawkish comments from Fed President Bullard drove-out investors from safe-haven buying. The yield on the benchmark 10-year Treasury note dipped one basis point to 1.837 percent and the yield on the short-term 2-year bonds rose one basis point to 0.897 percent by 1245 GMT.
The U.S bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Federal Reserve's target. Today, crude oil prices fell more than 1 pct on firm global supply, a stronger dollar and surging output from Iran to Europe and Asia. Moreover, Iranian deputy oil minister quoted that Iran plans to increase oil export capacity to 2.2 million barrels by the summer and has no plans to freeze its level of oil production and export. The International benchmark Brent futures fell 1.25 percent to $48.15 and West Texas Intermediate (WTI) dipped 1.24 percent to $47.81 by 1110 GMT.
Moreover, the St Louis Fed President Bullard in Beijing said that he expects 2-3 rate hikes in 2016 and GDP growth of about 2 percent. Said lower inflation expectations somewhat worrying and economy to face some headwinds from abroad. Said US is basically at full employment and sees inflation moving to 2 percent over next year or two.
Markets now look ahead to a lighter flow of data in the week ahead, highlighted by durable goods orders on Thursday, followed by GDP and University of Michigan consumer sentiment on Friday. Additionally, markets receive 2-Year Note, 5-Year Note and 7-Year Note auctions on Tuesday, Wednesday and Thursday, respectively.
The material has been provided by InstaForex Company – www.instaforex.com