U.S. Treasuries suffer ahead of weekly initial jobless claims, ISM July manufacturing PMI

The U.S. Treasuries suffered during Thursday’s afternoon session, despite an overnight rate cut by the Federal Reserve ahead of today’s weekly initial jobless claims and ISM manufacturing PMI for the month of July, both scheduled for release by 12:30GMT and 14:00GMT respectively.

The yield on the benchmark 10-year Treasury yield surged nearly 2 basis points to 2.039 percent, the super-long 30-year bond yields also edged 1-1/2 basis points higher to 2.541 percent while the yield on the short-term 2-year traded flat at 1.886 percent by 12:00GMT.

As widely expected, the Fed reduced the target range for the fed funds rate by 25bp to 2.0-2.25 percent. Nevertheless, slightly tilted to the hawkish side, Fed Chairman Jerome Powell noted that he does not see the rate cut as “a mid-cycle adjustment to policy”, highlighting that it was not “the beginning of a lengthy cutting cycle," Eurobank Economic Analysis & Financial Markets Research reported.

In response, the 2Y/10Y yield curve flattened at 14bps, the lowest level since May, with shorter-dated Treasury yields rising during overnight session Wednesday as investors scaled back expectations on future rate cuts and longer-dated Treasury yields falling on the Fed's muted inflation outlook and the stop of its balance sheet normalization two months earlier, the report added.

As the dust settles on the Fed’s policy announcement, the data focus in the US today will be on the manufacturing sector, with July’s ISM and Markit PMI due to indicate a subdued start to the third quarter, Daiwa Capital Markets reported.

Meanwhile, the S&P 500 Futures remained tad 0.06 percent higher at 2,983.88 by 12:05GMT.