U.S. Treasuries lower as investors eye next week’s policy decision

The U.S. Treasuries saw selling across the curve Friday, following the ECB's decision to taper monthly bond purchases. Markets will remain focused on the Federal Reserve last monetary policy decision for 2016, which is scheduled to be released next week.

The yield on the benchmark 10-year Treasury note rose 4 basis points to 2.42 percent, the yield on long-term 30-year Treasury climbed 4-1/2 basis points to 3.13 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 1.12 percent by 12:00 GMT.

Moreover, the European Central Bank in its yesterday’s final monetary policy decision of 2016 reduced the pace of its monthly bond-buying to 60 billion Euros from 80 billion, but extended the programme by nine months (April-October). The central bank reiterated that quantitative easing (QE) will run until inflation's path is in line with its goal. Also, noted that it may increase the size or duration if needed.

We would describe this tapering decision as more hawkish than the expected extension of the current pace of quantitative easing by 6 months.

Lastly, markets will remain focused on the Federal Reserve last monetary policy decision for 2016, which is scheduled to be released on December 14.

The Federal Reserve is expected to increase the target range of the key interest rate by 25 basis points to 0.50 percent to 0.75 percent on December 14, with a unanimous decision. Little change to the statement, though the Committee is likely to acknowledge that market-based measures of inflation compensation have risen further.

Meanwhile, the S&P 500 Futures traded flat at 2,248 by 12:30 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at +67.01 (higher than +75 represents bullish trend).