Treasury short end yields creep up, as outlook improves

Improving economic outlook in US provided support to both ailing dollar and treasury short term yields.

• Treasury 2 year yield that touched 0.73% in March, prior to FOMC meetings are creeping up once more and speculation looks all set to challenge the high made in March. As of now 2 year treasury yield is trading at 0.65%, up from its 0.55%, recent low made on May 15^th.

Dollar is getting the required support from yield as speculation seem to be rising on both ends.

Dollar is likely to rise further against its major counterparts.

• Target for Euro is coming around 1.065, currently trading at 1.089.
• Target for pound is coming around 1.48, currently trading at 1.538.

Further improvements in economic outlook would push yields higher.

• Rate hike from Federal Reserve is now seems likely in September. However Federal funds rate still pointing at a later date, which means adjustments on yields will continue as we move in closer or market might expect sharp reaction, should FED choose to act in September.