U.S. Treasuries mixed post FOMC’s monetary policy decision; eyes on initial jobless claims

The U.S. Treasuries remained mixed during late afternoon session Thursday as the dust starts to settle on the Fed’s monetary policy announcements ahead of the country’s initial jobless claims and Philly Fed manufacturing index for the month of December, scheduled to be released today by 13:30GMT respectively.

The yield on the benchmark 10-year Treasuries slipped nearly 1-1/2 basis points to 2.764 percent, the super-long 30-year bond yields slumped nearly 5 basis points to 2.965 percent and the yield on the short-term 2-year 1-1/2 basis points lower at 2.658 percent by 11:30GMT.

The Federal Reserve raised the fed funds rate by a further 25bps to a range of 2.25-2.50 percent at this week’s two-day meeting which concluded late yesterday, as expected. The forward guidance in the statement was slightly modified.

The Fed reiterated that “further gradual increases in the federal funds rate” will be required noting thought that it is now its  “judgment” rather than its “expectation” that some further rate tightening will be consistent with the dual mandate.

Global equity markets’ reaction to the Fed’s verdict was negative. Investors who were expecting an imminent full pause in the Fed’s rate tightening cycle were disappointed while comments by Fed Chair Jerome Powell that the Central Bank has no plans to change the  pace of balance sheet reduction, in spite of the recent sharp fall in equity markets and rising uncertainty about the global growth outlook, also exerted a negative impact, Eurobank Economic Analysis & Financial Markets Research reported.

In FX markets, the USD extended its recent losses with the EUR/USD hitting a six-week high of 1.1475 earlier today. News that the European Commission and the Italian government reached a deal on the 2019 budget, avoiding the triggering of an Excessive Deficit Procedure, favored the common currency.

Meanwhile, the S&P 500 Futures remained nearly flat at 2,505.12 by 11:40GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -41.20 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex