U.S. Treasuries ease losses ahead of Q2 GDP, 7-year auction

The U.S. Treasuries slumped Thursday, as investors wait to watch the country’s second-quarter GDP, scheduled to be released today by 12:30GMT. Also, investors await the Federal Open Market Committee (FOMC) members speeches, scheduled to be held later today.

The yield on the benchmark 10-year Treasury climbed nearly 4 basis points to 2.34 percent, the super-long 30-year bond yields surged 3-1/2 basis points to 2.89 percent and the yield on short-term 2-year note traded 1/2 basis point higher at 1.49 percent by 10:50GMT.

Later today in the US, the third estimate of Q2 GDP is unlikely to show any significant revisions from the second estimate of 3.0 percent q/q annualized. In addition, the August advanced goods trade and inventory reports are due along with the usual weekly claims figures. The Treasury will sell 10Y notes.

Speaking about the uncertain inflation outlook and implications for monetary policy in a keynote speech at the NABE meeting in Cleveland on Tuesday, the Fed Chair stressed that there are risks surrounding persistently easy policy and thus, “it would be imprudent to keep monetary policy on hold until inflation is back to 2 percent”.

In reaction to an upward shift in short-term Fed rate hike expectations following Janet Yellen’s hawkish tone, UST yields moved higher and the USD was firmer across the board. Looking at the remainder of the day, the focus is on a tax plan expected to be unveiled by the Treasury Department and Republicans before Congress.

Meanwhile, the S&P 500 Futures traded 0.08 percent lower at 2,502.50 by 10:55GMT, while at 10:00GMT, the FxWirePro's Hourly Dollar Strength Index remained slightly bullish at 91.38 (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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