The US Treasuries complex saw widespread gain across the curve on Tuesday, largely finding upward momentum as markets remain concerned about Brexit possibilities, solidified by stronger polling in favour of an exit in recent days.
Also, investor’s wary ahead Federal Open Market Committee (FOMC) gathering scheduled for June 14-15, accompanied by Federal Reserve Chair Janet Yellen's speech that is likely to clear the air on Fed's stance on interest rate hike.
The yield on the benchmark 10-year Treasury note fell 3-1/2 basis points to 1.582 percent (seen marching lower towards 1.50 percent mark) and the yield on short-term 2-year Treasury note dipped nearly 3 basis points to 0.690 percent by 10:55 GMT.
In the global debt market, the benchmark German 10-year bund yields fell below zero for the first time to -0.029 percent. The 15-year JGB yield dip below zero for the first time, it is down at -0.001 percent and the benchmark 10-year JGB yield hit a fresh all-time low of -0.162 percent. The UK 10Y gilt yield hits new low of 1.15 pct, likely to test 1.10 pct mark as Brexit vote loom.
The May advance retail sales report revealed an overall 0.5 percent m/m result, above market expectations for a 0.3 percent m/m reading, as compared to 1.3 percent m/m reading that occurred in April. Meanwhile, ex-autos retail sales increased 0.4 percent m/m, in line with expectations for a 0.4 percent m/m result, from 0.8 percent m/m reading seen in April.
The latest polls by various corporate bodies in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favor of "leaving" the European Union (EU) has outnumbered those who want to "remain", raising the possibility that Britain might leave the EU after 43 years of membership in the bloc.
According to a recent poll on Brexit by YouGov, showed 46 percent of participant are in favour of ‘Leave’ while 39 percent wanted to ‘Remain’, rest being indecisive. Further, a new UK poll on the EU by ICM for the Guardian shows a 6 percent lead for the Leave side (53-47 percent), when undecided of 6-7 percent were excluded. Reportedly the results were the same for polls conducted online and by phone. This contrasts with prior rumours of a similarly-sized pro-Remain balance.
According to the latest Betfair odds, the implied probability of the UK voting to remain in the EU has now fallen to 55 percent, down from 59 percent earlier and around 64 percent yesterday. Last Thursday the implied probability to remain peaked at 78 percent.
Moreover, nothing is really expected from the Fed as far as higher rates, how policymakers have taken into account recent payrolls weakness is something that could go a long way in setting up markets for a potential hike in July. Although price action remains doubtful, more hawkish tones from across the FOMC spectrum have definitely highlighted an increased desire to resume policy normalization.
Meanwhile, S&P 500 Futures fell 4.25 points to 2,065.50 by 12:35 GMT.
