U.S Treasury bonds slump on tracking crude oil prices

The U.S. Treasury bond prices edged down, sending yields higher for second straight day on Friday as investors cooled on safe-haven assets amid gains in riskier assets including stocks and oil. Also, investors pay close attention to the next weeks FOMC meeting and Federal Reserve Chair Janet Yellen speech in an attempt to estimate the Fed's likely next step to raise interest rate.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, moved higher 0.67 pct to 1.883 pct and the yield on the 2-year Treasury bond climbed 1.46 pct to 0.830 pct by 1230 GMT.

Yesterday, Crude oil prices jumped to 5-month high as Energy Information Administration's (EIA) showed that crude stock rose lower than the market expectation last week. The crude inventories rose 2.1 million barrels, from prior build of +6.6 million barrels for the week ending 15 April. This came alongside a decreases seen in gasoline inventories of -0.1 million barrel, from prior -4.2 million barrel and distillate inventories of -3.6 million barrel, as compared to a build of +0.5 million barrel seen prior. Moreover, Market speculation that Petroleum Exporting Countries (OPEC) and Russia will meet in Moscow next month to again strike a deal on oil output freeze, boosted crude oil investors confidence. But, Russian Energy Minister Alexander Novak denied about any such meeting happening in Russia in May. On Sunday, the negotiations between Petroleum Exporting Countries (OPEC) and Russia failed to reach an agreement in the Doha round of talks to strike a deal on oil output freeze. The International benchmark for crude oil prices, Brent futures rose 0.61 pct to $44.80, while West Texas Intermediate crude oil jumped 0.53 pct to $43.41 by 1230 GMT.

After wave of disappointing data last and this week, investors may be expecting no more hikes from Federal Reserve in its up-coming policy meeting. Nevertheless, we continue to see a more careful, wait and see approach to continue being employed by the Fed likely to materialize in higher rates come the June FOMC meeting (still delivering only 50bps of additional tightening over the course of 2016).

Also, the Federal Reserve Chair Yellen said that there is a great deal of uncertainty over interest rate hike and therefore, she favours a cautious approach.

Lastly, the investors will also look forward to next week’s FOMC meeting on Wednesday, 27th April and Q1 GDP figure on Thursday, 28th April (1230 GMT).

Meanwhile, S&P 500 Futures rose 0.04 pct to 2,098.75 by 1255 GMT, on rallying oil prices.