U.S. Government bonds slump in thin holiday trading

The U.S. Treasuries were pushed lower across much of the curve in quiet Tuesday session after long Christmas holidays. The yield on the benchmark 10-year Treasury note rose 2 basis points to 2.55 percent, the super-long 30-year bond yield also climbed 2 basis points to 3.13 percent and the yield on short-term 2-year note bounced nearly 1 basis point to 1.21 percent by 12:00 GMT.

Last week, the Federal Reserve Chair Janet Yellen commented that the United States is now seeing its strongest labour market in nearly a decade as job creation has continued at a relatively steady pace. Also added that she has seen signs of wage growth improving and that weekly earnings for younger workers are making strong gains.

The Federal Open Market Committee increased the fed funds rate to a 0.50-0.75 percent range on December 14, as widely expected. The statement noted that information received since the November meeting indicates that the labour market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year.

Also, the new projections showed that the central bankers expect three quarter-point rate increases in 2017, up from the two seen in the previous forecasts in September, based on median estimates.

Lastly, we foresee that Treasury prices will keep drifting between small gains and losses in quiet trading session. Also, trading activity will resume after New Year celebrations, probably from the second week of January, 2017 as global market receives no more important data till then.

Meanwhile, the S&P 500 Futures traded flat at 2,261 by 12:10 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at +62.24 (higher than +75 represents a bullish trend).