The US Treasury complex traded modestly lower on Wednesday as markets now sit in anticipation of the June FOMC statement and Fed Chair Yellen’s post-statement press conference.
The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 1.628 percent and the yield on short-term 2-year Treasury note also jumped 1-1/2 basis point to 0.738 percent by 11:20 GMT.
The FOMC monetary policy statement will be published Wednesday, 15 June at 18:00 GMT, accompanied by updated economic projections and followed by Fed Chair Yellen’s post-statement press conference. The US Federal Reserve is widely expected to maintain the Fed funds target range at 0.25-0.50 percent. On balance, markets look to see how the FOMC is interpreting recent data weakness (particularly employment) and how it may alter intentions to raise rates further in 2016.
In many respects, the December move to raise rate was viewed simply as the Fed looking to get the show on the road, allowing them to possibly maintain a shallow rate trajectory as they move towards more normal policy.
We do not expect much change at the FOMC meeting today, as we believe it is too soon for the Fed to guide the market toward a July rate hike.
Hence, clear focus will on Federal Reserve Chair Janet Yellen's speech in an attempt to estimate the Fed's likely next step to raise interest rate.
In addition, the May Labor Department producer prices index (PPI) increased +0.4% m/m (-0.1% y/y) result, comes in above market expectations for a +0.3% m/m, as compared to +0.2% m/m increase that occurred in April. Meanwhile, PPI ex-food and energy rose +0.3% m/m (+1.2% y/y) in May, also above market expectations for a +0.2% m/m, from the unrevised +0.1% m/m (+0.9% y/y) reading seen in April.
The June Federal Reserve Bank of New York manufacturing activity index recorded considerable upward pressure in the general business conditions measure to 6.01, comes in well above market expectations for a -3.50 result, as compared to the unrevised -9.02 reading seen in May.
Meanwhile, prices paid increased to +18.37 in June, from up +16.67 in May. Alongside the increase seen in the headline reading, stronger readings were seen across most key underlying components.
Meanwhile, S&P 500 Futures rose 3.75 points to 2,070 by 11:30 GMT.
The material has been provided by InstaForex Company – www.instaforex.com