U.S. Treasuries flat in muted session ahead of FOMC members’ speeches

The U.S. Treasuries remained flat Tuesday ahead of a host of speeches by FOMC members Dudley and Brainard scheduled for later in the day. Wall Street rallied yesterday as newswires reported attempts by House Speaker Paul Ryan and White House economic advisor Gary Cohn to convince President Trump to ditch his proposed tariffs on imports of steel and aluminum.

The yield on the benchmark 10-year Treasuries rose 1/2 basis point to 2.88 percent, the super-long 30-year bond yields remained flat at 3.15 percent and the yield on the short-term 2-year too steadied at 2.23 percent by 11:00GMT.

Taking their cue from US equities’ healthy gains overnight, European bourses were firmer in early trade on Tuesday supported by somewhat receding trade war fears. A number of leading Republicans warned that US President Donald Trump’s proposed measure for the imposition of tariffs on imported steel and aluminum could eventually trigger an escalating trade war.

Increased risk appetite somewhat dented the safe haven appeal of core government bonds while in FX markets, the USD was little changed on the day. Looking at today’s data calendar, US factory orders for January is the only release of note.

The remainder of this week’s diary seems very unlikely to be market-moving, but is highlighted by the February non-manufacturing ISM (today), January factory orders (tomorrow), and the final January trade balance and revised productivity and unit cost data for Q4 (Wednesday).

Lastly, the latest Fed Beige Book will also be released on Wednesday and there is a smattering of Fedspeak through the week before the pre-FOMC meeting blackout period begins. In the bond market, there are once again so far only bill auctions scheduled for the coming week

Meanwhile, the S&P 500 Futures rose 0.21 percent to 2,724.50 by 11:05GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained slightly bearish at -82.15 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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