U.S. Treasuries trade narrowly mixed as FOMC keeps policy rate steady

The U.S. Treasuries traded narrowly mixed Thursday with little overall reaction to the November FOMC statement that left rates unchanged as policymakers remain in search of some further evidence of continued progress toward its objectives.

The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.803 percent, the yield on long-term 30-year Treasury remained steady at 2.56 percent and the yield on short-term 2-year note slid 1 basis point to 0.814 percent by 12:00 GMT.

The Federal Reserve left policy rates on hold at the Federal Open Market Committee (FOMC) meeting that concluded Wednesday, flagging possibilities of a December rate hike. The central bank will continue to monitor the developments in consumer prices and the country’s labour market.

The FOMC, chaired by Janet Yellen held the Federal Funds Rate unchanged, by a majority 8-2 vote in the range of 0.2-0.50 percent since last December, largely in line with markets had initially anticipated. However, there were two dissenting votes by George and Mester, each in favour of a hike to 0.50-0.75 percent.

Moreover, the U.S. presidential election is due on November 8 in which the race between Democrat candidate Hillary Clinton and Republican Donald Trump is narrowing. The market is wary of a Brexit-like outcome at the presidential election on November 8 as recent polls showed a tighter race between the two Presidential candidates.

The RealClearPolitics poll displayed that Democratic nominee Hillary Clinton’s lead over her Republican rival Trump has narrowed down to 2.2 percentage points from more than 7 points two weeks ago.

In addition, the Treasury prices are expected to rally this week as investors assume that the triumph of Republican Party nominee Donald Trump over Democratic Clinton will weaken the greenback against major trading currencies, while boosting demand for safe-haven assets.

Markets now await a greater flow of data on Thursday, highlighted by jobless claims, non-farm productivity/unit labour costs, ISM non-manufacturing and factory orders releases. However, clear focus will be on the October employment report looming on Friday.

Meanwhile, the S&P 500 Futures traded 0.26 points higher at 2,097.75 by 12:20 GMT.