U.S. Treasuries plummet ahead of FOMC member Dudley’s speech, 3-year auction

The U.S. Treasuries plummeted Monday as investors wait to watch the Federal Open Market Committee (FOMC) member Dudley’s speech, scheduled for later in the day. Also, the country’s 3-year note auction, due on November 7 by 18:00GMT will add further direction to the debt market.

The yield on the benchmark 10-year Treasury slumped 2 basis points to 2.32 percent, the super-long 30-year bond yields slid nearly 1-1/2 basis points to 2.81 percent and the yield on short-term 2-year note also 1-1/2 basis points lower at 1.61 percent by 11:20GMT.

The focus in the US seems likely to remain on the Republican tax reform proposals, with non-negligible concerns about the overall impact on the deficit as well as the likely opposition from those groups set to lose out from the proposed changes representing significant obstacles to progress. Meanwhile, the coming week’s US economic diary is significantly lighter than in the past week, as is often the case following an employment report that was released early in the month.

The September BLS JOLTS survey will be released tomorrow, together with the Fed’s September consumer credit data. The weekly jobless claims and September wholesale trade survey are due Thursday, followed on Friday by the preliminary University of Michigan consumer survey for November. And, in the bond market, the Treasury will auction 3-year notes on Tuesday, 10-year notes on Wednesday and 30-year bonds on Thursday.

In FX markets, the US dollar increased to its highest level in nearly eight months against the yen on Monday, after Friday’s US positive economic data enhanced expectations for a December fed funds rate hike and further tightening by the Fed in 2018, mirroring continued monetary policy divergence between the Fed and the Bank of Japan.

Ahead of a thin data calendar in the post-US payrolls week, the focus will probably center on US President Donald Trump’s Asian tour that started in Japan. Moreover, the House of Representatives is expected to vote on a final draft of the tax plan towards the end of the week, while the Senate will also release its own version of the tax plan.

Meanwhile, the S&P 500 Futures traded 0.08 percent lower at 2,580.75 by 11:25GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 22.81 (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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