U.S. Government bonds sag ahead of jobless claims; FOMC meeting remains prime focus

The U.S. Treasuries were pushed lower across the curve on Thursday ahead of the jobless claims data. We expect little movement in the Treasury prices ahead of next week’s FOMC meeting that Treasuries as markets look to see how interested the Fed is to continue along a gradual path higher as we move into 2017.

The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 2.37 percent, the yield on long-term 30-year Treasury also climbed 3 basis points to 3.05 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 1.11 percent by 12:30 GMT.

On Wednesday, the October US Commerce Department trade balance report recorded upward pressure in the deficit to USD 42.6 billion, as compared to the revised USD 36.2 billion result that occurred in September (previous was USD 36.4 billion), just above expectations for a –USD 42.0 billion deficit result.

The FOMC is expected to raise the target range of the federal funds rate by 25 basis points to 0.50 percent to 0.75 percent, with a unanimous decision. Little change to the statement, though the Committee is likely to acknowledge that market-based measures of inflation compensation have risen further, said Morgan Stanley in its research note.

Meanwhile, the S&P 500 Futures traded flat at 2,234 by 12:30 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at -12.87 (lower than -75 represents bearish trend).