Canadian bonds nearly flat ahead of Fed statement

The Canadian bonds traded nearly flat on Wednesday as investors awaited for Fed policy decision and Fed Chair Yellen’s post-statement press conference.

The yield on the benchmark 10-year bonds which moves inversely to its price hovered around 1.127 percent by 13:00 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.

Lastly, Canadian stock futures pointed to a higher opening for Canada's main stock index on Wednesday as expectations of a dovish stance from the U.S. Federal Reserve soothed investor concerns over whether Britain will vote to leave the European Union. Meanwhile, June futures on the S&P TSX index were up 0.20 percent at 11:30 GMT.