U.S. Government bonds little changed as investors await series of economic data

The US Treasuries little changed during a relatively light Thursday session. From a data standpoint there was little of great significance to impact direction.

The yield on the benchmark 10-year Treasury note rose 1 basis point to 1.698 percent, the yield on 5-year bond remained steady at 1.200 percent and the yield on short-term 2-year note slid 1/2 basis point to 0.754 percent by 11:30 GMT.

Investors now look ahead to a rush of data on Thursday that could go a long way in providing support for hawks at the September FOMC meeting, highlighted by retail sales, producer prices, Empire manufacturing, Philadelphia Fed manufacturing, business inventories, current account, industrial production/capacity utilization and jobless claims.

Moreover, with the FOMC media blackout period now in effect, there is not much in the way of commentary that is likely to impact rates to any great degree. Overall, we continue to see the September meeting as a much closer call than markets are currently pricing in, though lingering dovishness may once again triumph (not that we see a decision to leave rates unchanged as any real victory).

The US CPI data are the last set of key data before the Fed meets next week. We doubt the picture here will change sufficiently to alter the inflation view held by the dovish FOMC members, reported ANZ.

Next week’s FOMC meeting is set to be interesting given the recent divergent Fed speak. The dovish view appears to be in the ascendency for now. We expect no change in policy. The Fed is extending its forecasts out to 2019. We expect there to be a flattening in the Fed’s median ‘dot plot’ with just one hike for this year and two hikes per year (compared to three in the June forecasts) thereafter, they added.

Meanwhile, the S&P 500 Futures traded 5 points higher at 2,118 by 12:30 GMT.