U.S. Treasuries narrowly mixed in subdued trade, markets digest FOMC decision

The U.S. Treasuries were narrowly mixed in thin trading activity during a relatively quiet Friday session that saw little data of much significance. The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.56 percent and the yield on short-term 2-year note up 1/2 basis point to 1.26 percent by 12:00 GMT.

The Federal Open Market Committee increased the fed funds rate to a 0.50-0.75 percent range, as widely expected on later Wednesday. 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.

We foresee that next year the 10-year yields will likely break 3 percent mark, the highest level in three years if the Federal Reserve successfully increases interest rate in 2017. We also expect that the inflation numbers will be the key determinants in the New Year to support the Federal Reserve hawkish path.

Meanwhile, the S&P 500 Futures traded 4.25 points higher at 2,262.75 by 12:20 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bullish at +134.35 (higher than +75 represent a bullish trend).