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U.S. Treasuries rise modestly following dovish FOMC December meeting minutes

The U.S. Treasuries saw modest buying Thursday following the release of minutes from the December FOMC meeting, marked by increased uncertainty regarding the impact of future fiscal and economic policy.

The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.43 percent, the super-long 30-year bond yield dipped 1-1/2 basis points to 3.03 percent and the yield on short-term 2-year note slid 1 basis point to 1.22 percent by 12:00 GMT.

Minutes from the 13 - 14 December FOMC meeting indicated that most participants judged that a gradual pace of rate increases was likely to be appropriate to promote the Committee's objectives of maximum employment and 2 percent inflation (currently expected to be roughly 75 basis points of tightening over the course of 2017).

A gradual pace was also viewed by some participants as likely to be warranted because the proximity of the federal funds rate to the effective lower bound placed constraints on the ability of monetary policy to respond to adverse shocks to the aggregate demand for goods and services.

However, while viewing a gradual approach to policy firming as likely to be appropriate, participants emphasised the need to adjust the policy path as economic conditions evolved. They pointed to a number of risks that, if realised, might call for a different path of policy than they currently expected (highlighting increased uncertainty regarding fiscal and other economic policies). As to be expected policymakers are likely to maintain current views until further details surrounding fiscal policy are revealed.

Lastly, markets now look ahead to the ADP employment estimate, jobless claims and ISM non-manufacturing data on Thursday, ahead of the December employment report on Friday.

Meanwhile, the S&P 500 Futures traded 4.50 points lower at 2,259.5 by 12:30 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bearish at -120.99 (lower than -75 represent a bearish trend).

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