U.S Treasury Climbs ahead of March FOMC Minutes, Weak Oil Prices

U.S Treasury Climbs ahead of March FOMC Minutes, Weak Oil Prices

5 April 2016, 15:47
Roberto Jacobs
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U.S Treasury Climbs ahead of March FOMC Minutes, Weak Oil Prices

U.S Treasuries advanced, pushing the 10-year bond yield to the lowest in more than a month as investors anticipating a dovish March FOMC meeting minutes, reflecting a greater concern among Fed officials about the risks posed to the US economic outlook from global developments. Also, a decline in stocks and lower oil prices drove investors to the relative safety of U.S. government bonds.

The 10-year bonds yields fell 4 bps to 1.72 pct; the yield earlier touched 1.72 pct (lowest since 1st March) and 2-year bonds yield dipped 2 bps to 0.724 pct.

“It’s a reaction to the pretty weak sentiment in risk assets overnight in Asia and at the open in Europe this morning,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP.

On Monday, the 2-year yield found modest upward pressure, holding right around the 0.75%-mark, alongside little change in the 10Yr yield, continuing to hold below 1.80%.

Markets now look ahead to February trade balance and March ISM non-manufacturing that that are each expected to show modest improvement, ahead of minutes from the 15-16 March FOMC meeting on Wednesday.

Lastly, we continue to expect the Fed will deliver about 50bps of additional tightening over the remainder of 2016, with an initial move coming at the June meeting and then allowing some cushion to move further at September or December meeting.

The market will primarily focus on the upcoming FOMC meeting minutes on Wednesday. Although, we do not anticipate any market movers from the coming minutes and except the same hint for increase in policy rates at the June FOMC meeting.

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

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