U.S. Treasuries tad lower ahead of FOMC speeches, 30-year auction

The U.S. Treasuries traded tad lower Tuesday as investors remain geared up to witness a host of speeches by the Federal Open Market Committee (FOMC) members throughout this week. Member Rosengren’s speech, due later today will add further direction to the debt market.

The yield on the benchmark 10-year Treasury, fell 1 basis point to 2.17 percent, the super-long 30-year bond yields slumped nearly 2 basis points to 2.77 percent and the yield on short-term 2-year note traded flat at 1.36 percent by 11:10GMT.

US Treasury yields were modestly higher in European trade following comments by New York Fed President William Dudley that the country’s inflation will gradually rise alongside wages as labour market conditions continue to improve.

Turning to the EU periphery, sovereign bonds retained a firm tone supported by pro-EU centrist Emmanuel Macron’s comfortable majority in French parliamentary elections while ECB President Mario Draghi’s recent comments suggesting that the Central Bank is in no hurry to exit its QE programme, also continued to have an impact.

In FX markets, higher US Treasury yields supported USD while GBP weakened amid uncertainty over domestic politics and the UK government’s Brexit strategy as formal Brexit negotiations started on Monday.

Lastly, US current account figures for the first quarter along with revisions to the series are also due. However, this morning's scheduled remarks from Fed Vice Chair Fischer will be made at a conference on macro-prudential issues, and so might not have clear messages on rates.

Meanwhile, the S&P 500 Futures traded flat at 2,447.50 by 12:10GMT, while at 12:00GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bullish at 127.37 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex