U.S. Government Bonds Flat in Quiet Trade

U.S. Government Bonds Flat in Quiet Trade

10 May 2016, 15:24
Roberto Jacobs
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U.S. Government Bonds Flat in Quiet Trade

The U.S. government bonds were trading nearly flat on Tuesday amid subdued trade with investors seeking riskier assets. The yield on the benchmark 10-year Treasury note which moves inversely to its price stood flat at 1.760 pct and the yield on the 2-year Treasury bond rose 1bp to 0.722 pct by 1205 GMT.

Yesterday, the Chicago Fed President Evans said that the U.S economic fundamentals are strong and he sees growth about 2.5 pct for the rest of the year. Said would like to have more confidence on the inflation outlook and the Fed's 'wait and see' stance is appropriate. On the other hand, New York Fed President Dudley said that 2 policy rate hikes in 2016 remain a 'reasonable expectation', although small changes in the outlook could lead to increases being delayed for months at a time.

On Friday, the April U.S. labour department employment situation report revealed overall 160k increase in non-farm payrolls, well below market expectations for a 200k increase, as compared to revised 208k result that occurred in March, previous was 215k. This comes alongside no change in the unemployment rate of 5.0 pct, above expectations for a 4.9 pct result. Moreover, average hourly earnings increased 0.3 pct m/m, from revised 0.2 pct m/m reading seen in March previous was 0.3 pct m/m.

Today, Brent crude oil prices jumped more than 1 pct with supply outrages from Canada and Nigeria helping alleviate the global glut of crude oil.  The International benchmark Brent futures rose 1.54 pct to $44.28 and West Texas Intermediate (WTI) dipped 0.28 pct to $ 43.32 by 1205 GMT.

Moreover, the markets now look ahead to a lighter flow of data this week, highlighted by retail sales, producer prices, business inventories and University of Michigan consumer sentiment releases on Friday. Additionally, markets receive 3-Year Note, 10-Year Note and 30-Year Bond auctions on Tuesday, Wednesday and Thursday, respectively.

Meanwhile, S&P 500 Futures rose 7.50 pts to 2,061.75 by 1220 GMT.

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