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U.S. Treasuries sag amid Fed hike talk

The U.S. Treasuries slid after reading US FOMC April meeting minutes and hawkish comments from Federal Reserve officials strengthened bets of an interest rate hike in June. The yield on the benchmark 10-year Treasury note rose 2bps to 1.865 pct and the yield on the short-term 2-year Treasury bond also climbed 2bps to 0.901 pct by 1215 GMT.

The U.S bonds plunged after minute release from the April FOMC meeting that indicated policymakers were in support of a move to raise rates in June if the economy supported it. The FOMC in its April 26-27 meeting minutes showed quite a hawkish view of Fed officials. This indicates that several participants believed in April that it is appropriate to raise rates in June if the incoming data indicated a rebound in the economy.

On balance, these minutes go a long way in uncovering sentiment not very much reflected in the April FOMC statement. On balance, this release should go a long way in making the June meeting a live event, something that was seen as less likely in the wake of the April meeting. However, given the need for data to cooperate as the meeting approaches, nothing is certain. Nevertheless, we continue to expect only 50bps worth of tightening from the FOMC in 2016, regardless of whether or not they choose to act in June.

The US Initial jobless claims for the week ending 14 May decreased -16k to 278k, just above expectations for a 275k, from unrevised 294k reading seen in the week prior. The 4-week average was reported at 275.8k, from the unrevised 268.3k reading seen in the week prior. Meanwhile, continuing claims for week ending 7 May decreased to 2.152mln, versus the revised 2.165mln reading seen prior (previous 2.161 million). The insured unemployment rate held unchanged at 1.6 pct.

Markets now look ahead to existing home sales data to finish off the week. Meanwhile, S&P 500 Futures rose 0.31 pts to 2,045 by 1215 GMT.

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October 24 09:00 UTC Released

EZMarkit Comp Flash PMI

Actual

55.9 bln EUR

Forecast

56.5 bln EUR

Previous

56.7 bln EUR

October 24 09:00 UTC Released

EZMarkit Serv Flash PMI

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54.9 bln EUR

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55.6 bln EUR

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55.8 bln EUR

October 24 12:55 UTC 206206m

USRedbook MM

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-1.4 %

October 24 12:55 UTC 206206m

USRedbook YY

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3.6 %

October 24 12:55 UTC 206206m

USRedbook MM

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-1.4 %

October 24 12:55 UTC 206206m

USRedbook YY

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Previous

3.6 %

October 24 13:00 UTC 211211m

MXFlash Trd Bal Non-EU*

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Previous

-0.7 Bln EUR

October 24 13:00 UTC 211211m

MX1st Half-Mth Infl YY*

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Previous

1.00 %

October 24 13:00 UTC 211211m

USIGAE Econ Activity MM

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Forecast

Previous

-0.7 %

October 24 13:00 UTC 211211m

MXIGAE Econ Activity YY

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Forecast

1.50 %

Previous

1.00 %

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