U.S. Treasuries remain steady in quiet trading day ahead of 5-year auction, Q4 2018 GDP

The U.S. Treasuries traded steady during late European session Monday, as investors remained side-lined amid a quiet session that witnessed data of little economic significance. However, the 5-year Note auction, scheduled for later today shall lend some direction to the debt market.

The country’s Q4 2018 GDP and ADP non-farm employment data for January, due for released by mid of this week will bring further movements in bond prices. Also, the Federal Open Market Committee (FOMC) is due to host the first monetary policy meeting of this year, on the same day, at 19:00GMT.

The yield on the benchmark 10-year Treasury yield remained tad higher at 2.755 percent, the super-long 30-year bond yields remained flat at 3.061 percent and the yield on the short-term 2-year traded nearly 1 basis point higher at 2.607 percent by 11:15GMT.

In the US, the main event this week will be the conclusion of the FOMC’s latest two-day meeting on Wednesday, accompanied by Chair Powell’s post-meeting press conference. While no change to policy is expected, Powell will likely adopt a more dovish tone than in December recognising heightened economic uncertainties around the turn of the year, not least given the disruption from the government shutdown, Daiwa Capital Markets reported.

Of course, with the federal government reopening this week, at some point markets could well receive a deluge of data postponed during the shutdown. But the first estimate of Q4 GDP, which was due for release on Wednesday, might well still be delayed as the statisticians might not yet have sufficient information.

"In the event it is released, we expect growth to have slowed to around 2-1/2 percent q/q annualised, from an average pace of 3.2 percent q/q annualized, in the first three quarters of the year. In the bond market, the Treasury will auction 2-year and 5-year notes today, followed tomorrow by 7-year notes and 2-year floating-rate notes," the report further commented.

Meanwhile, the S&P 500 Futures edged 0.44 percent lower to 2,651.62 by 11:20GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -118.29 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex