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The U.S. Treasuries surged Thursday ahead of the country’s retail sales for the month of May and weekly initial jobless claims, scheduled to be released today by 12:30GMT respectively. However, the widely anticipated 25 bps rate hike by the Federal Open Market Committee (FOMC) in the overnight session failed to support bond prices.
The yield on the benchmark 10-year Treasuries slumped 2 basis points to 2.94 percent, the super-long 30-year bond yields plunged 4 basis point to 3.06 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 2.55 percent by 11:40GMT.
The Fed is clearly satisfied with conditions in the US economy. “The economy is doing very well” was Chairman Powell’s opening gambit in his press conference. And the post-meeting statement saw economic activity now described as rising at a “solid rate” (compared with the “moderate rate” of growth reported previously).
Among other changes in a shorter press statement, the FOMC removed the previous reference to market-based measures of inflation expectations remaining low, as well as pledge to “carefully monitor” actual and expected inflation developments. The risks to the economic outlook were still viewed as “roughly balanced”, however. As expected, the now outdated “forward guidance” language evolved to remove the previous reference to the fed funds rate remaining below its long-run levels for some time.
Today will bring the advance US retail sales report for May, which will cast further light on how consumer spending is evolving in Q2. A drop in sales of autos is expected to restrain the headline figure, but solid fundamentals should lead to respectable growth in other components, although some of the ex-auto advance will likely result from higher prices of gasoline. Data for May’s export and import prices, April’s business inventories, and the latest weekly jobless claims are also due.
Meanwhile, the S&P 500 Futures rose 0.06 percent to 2,780.75 by 11:45GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -61.22 (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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