U.S Treasury Falls on Stronger Than expected 4Q GDP Data

U.S Treasury Falls on Stronger Than expected 4Q GDP Data

28 March 2016, 10:25
Roberto Jacobs
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U.S Treasury Falls on Stronger Than expected 4Q GDP Data

The 10-year U.S. Treasury yield was down 3 bps to 1.9% on Monday after Treasuries pushed modestly lower to finish off the holiday shortened week on Thursday, largely brushing off the pullback seen in durable goods orders for February (that followed a surge seen to open 2016) and an increase in initial jobless claims.

Moreover, the February U.S. durable goods report revealed an overall -2.8% m/m reading, versus the revised +4.2% m/m reading that occurred in January (prev. +4.9% m/m), in line with market expectations for a -3.0% m/m result.

Apart from this, with employment data expected to remain strong and signs of budding inflation stemming from a rebound in energy prices, we anticipate the call to raise rates.

Overall, the 2-year yield found some upward pressure, holding just below the 0.90%-mark, alongside a similar increase seen in the 10-year yield, holding around 1.90%. Aside from non-farm payrolls on Friday, markets also await the release of personal income/spending, consumer confidence, the ADP employment estimate, ISM manufacturing and vehicle sales releases.

Lastly following the stronger than expected final 4Q15 GDP reading (up +1.4%, above expectations for a +1.0% increase), we expect downward pressure will likely resume in the week ahead, alongside increased chatter from FOMC speakers that is pointing to support for a hike coming as early as the April meeting as markets gear up for the March employment report on Friday.

Following are the up-coming auctions of U.S Treasury:

28 March US Bond auction of 2YR T.Note 29 March US Bond auction of 5YR T.Note 30 March US Bond auction of 7YR T.Note

The material has been provided by InstaForex Company - www.instaforex.com

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