U.S. Treasuries suffer on hawkish Fed September policy meeting minutes; FOMC members’ speeches in focus

The U.S. Treasuries lost ground during late afternoon session Thursday after the Federal Reserve’s September monetary policy meeting minutes remained hawkish ahead of the Philadelphia Fed Manufacturing Index for the month of October, scheduled to be released today by 12:30GMT.

Also, the Federal Open Market Committee’s (FOMC) members Bullard and Quarles will deliver their speeches respectively today at 13:00GMT and 15:30GMT.

The yield on the benchmark 10-year Treasuries jumped 3-1/2 basis points to 3.215 percent, the super-long 30-year bond yields also surged 3-1/2 basis points to 3.381 percent and the yield on the short-term 2-year traded 2 basis points higher at 2.903 percent by 10:30GMT.

The minutes of the Federal Reserve meeting on September 25-26 suggested that FOMC board members were of the view that more interest rate increases were on the cards. The question remained about how much. “A few” expected monetary policy would need to be “modestly restrictive”, suggesting a Fed funds rate above the longer-run level, St. George Economics reported in today’s Morning Report.

Policy makers have also estimated a long-run rate between 2.5 percent to 3.5 percent, but Fed chair Powell has previously highlighted the uncertainty about where the longer-run level actually sits. Nonetheless, another hike of 25 basis points by the Federal Reserve in December seems very likely. Focus on the US economy will be increasingly on signs of inflation and wages picking up in determining the path of future monetary policy next year and beyond, the report added.

In the US, meanwhile, alongside the weekly jobless claims figures today will bring the Philly Fed Index for October and the Conference Board’s Leading Index for September. In the markets, the Treasury will sell 30-year TIPS.

Meanwhile, the S&P 500 Futures traded 0.33 percent lower at 2,807.00 by 10:40GMT, while at 10:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -3.86 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex