U.S. 2-year Treasury yield trades at decade high on rising Fed rate hike expectations; markets eye Chair Powell’s testimony

The U.S. 10-year Treasuries remained flat on Tuesday as investors wait to watch Federal Reserve Chair Jerome Powell’s testimony in front of the Congress, scheduled to be held today by 14:00GMT. However, the country’s 2-year government bond yield hit a decade high during late Monday, following rising expectations of Fed rate hike, coupled with President Donald Trump’s fiscal spending plans and tax cuts.

The yield on the benchmark 10-year Treasuries traded flat at 2.85 percent, the super-long 30-year bond yields hovered around 2.96 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 2.59 percent by 11:15GMT.

The main event in the US today will arguably be Fed Chairman Jerome Powell’s semi-annual testimony to Congress, the first leg of which takes place before the Senate Banking Committee tomorrow.

The second leg before the House Financial Services Committee will follow on Wednesday, when the Fed’s Beige Book will also be released. The Q2 corporate reporting season will also begin to heat up with 7 DJI and 59 S&P500 companies scheduled to state their earnings.

On Wednesday, further attention will turn to the housing market with the housing starts and permits report for June. The Philadelphia Fed’s manufacturing survey for July and the Conference Board’s leading index for June are released on Thursday. In the bond market the US Treasury will auction 10-year TIPS on Thursday.         

Meanwhile, the S&P 500 Futures slipped 0.13 percent to 2,793.00 by 11:15GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 2.02 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex