U.S. Government Bonds Flat ahead of 30-Year Auction

U.S. Government Bonds Flat ahead of 30-Year Auction

11 May 2016, 16:01
Roberto Jacobs

U.S. Government Bonds Flat ahead of 30-Year Auction

The U.S. Treasuries were left relatively unchanged on Wednesday during a quiet session that saw few economic releases of note. The yield on the benchmark 10-year bonds held unchanged on the session, staying near to 1.76 pct mark and 2-year bonds yield rose 1bp to 0.734 pct by 1220 GMT.

The wholesale inventories rose 0.1 pct m/m, this comes in below market expectations for a rise of 0.3 pct m/m versus the revised -0.6 pct m/m reading that occurred in February (previous was -0.5 pct m/m). The weaker than expected increase in inventories stemmed from downward pressure seen in durables, which declined 0.1 pct m/m, offset by upward pressure seen from non-durables, which climbed 0.5 pct m/m.

On Monday, the Chicago Fed President Evans said that the U.S economic fundamentals are strong and 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.

Ahead of the flurry of data coming at the end of the week, markets now await for 10-Year Note and 30-Year Bond auctions on Wednesday and Thursday, respectively. Markets will also 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. Meanwhile, S&P 500 Futures fell 0.09 pts to 2,075.62 by 1230 GMT.

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