U.S. Treasuries climb ahead of FOMC’s policy decision, President Trump’s speech

The U.S. Treasuries remained on the upside Tuesday ahead of a host of events scheduled for this week – President Donald Trump is scheduled to deliver a keynote speech on January 31 by 02:00GMT and the ADP non-farm employment due on the same day by 13:15GMT. However, of utmost importance is the Federal Open Market Committee’s (FOMC) monetary policy meeting, due to be concluded on Wednesday by 19:00GMT.

The yield on the benchmark 10-year Treasuries fell 1 basis point to 2.68 percent, the super-long 30-year bond yields hovered around 2.94 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.11 percent by 11:10GMT.

All eyes will be on Wednesday’s conclusion of the FOMC meeting, which will be the last to be chaired by Janet Yellen. While the latest CPI figures were encouraging, suggesting that some of the transitory factors that kept inflation low in 2017 have started to diminish, we (like the consensus) don’t expect any change to policy this time around. However, the policy statement will be watched for hints to a possible tightening in March, when a new set of economic forecasts will be published. Data-wise, the latest employment report is due out on Friday.

Today, the Conference Board consumer sentiment indices for January are due along with the S&P CoreLogic Case Shiller home price data for November. In particular, consumer confidence is expected to tick higher on the back of recent stock market and labour market gains, as well as the tax reform, to move closer to the top of the post-recession range.

Meanwhile, the S&P 500 Futures traded 0.40 percent lower at 2,842.00 by 11:15GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained slightly bearish at -84.71 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend).

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