U.S. Government bonds slump ahead of preliminary Q3 GDP

The U.S. Treasuries were pushed lower across the curve Tuesday ahead of the preliminary third-quarter gross domestic product (GDP) data, which is expected to jump 3 percent.

The yield on the benchmark 10-year Treasury note rose 1-1/2 basis points to 2.33 percent, the yield on long-term 30-year Treasury inched 1 basis point to 2.99 percent and the yield on short-term 2-year note bounced 1/2 basis point to 1.11 percent by 12:00 GMT.

The preliminary third-quarter Commerce Department GDP release is on Tuesday, 29 November at 13:30 GMT. Despite the overall slowdown in activity seen for much of 2016, we expect to see greater momentum registered for 3Q16 leading to an overall GDP increase of 3.0 percent, as compared to the 1.4 percent increase seen in the second quarter of 2016.

Crude oil prices fell on worries that the OPEC will be able to cut production output cut during a meeting on Wednesday. The International benchmark Brent futures fell 1.93 percent to $48.27 and West Texas Intermediate (WTI) dipped 1.93 percent to $46.24 by 10:50 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) is meeting officially in Vienna on Wednesday to discuss a planned production cut in an effort to curb overproduction that has dogged markets and more than halved prices since 2014, Reuters reported.

With a high degree of uncertainty going into the last 24 hours before the meeting, oil price volatility is expected to be high. There remains disagreement among OPEC-members over which producers should cut by how much, and a plan for non-OPEC oil giant Russia to participate has so far also failed, they added.

Moreover, minutes from the 1 - 2 November FOMC meeting indicated that participants generally agreed that based on the relatively limited information received since the September FOMC meeting that the case for increasing the target range for the federal funds rate had continued to strengthen. Minutes indicated that labour market conditions had improved further and considered the firming in inflation and inflation compensation to be positive developments, consistent with continued progress toward the Committee's 2 percent inflation objective.

However, a number of participants expressed the view that some modest slack remained in the labour market or noted that readings on inflation compensation and inflation expectations remained low, alongside some participants who suggested that current conditions did not point to an immediate need to tighten policy or that some further evidence of continued progress toward the Committee's objectives would provide greater support for policy firming.

Nevertheless, most participants expressed a view that it could well become appropriate to raise the target range for the federal funds rate relatively soon as some participants noted that recent Committee communications were consistent with an increase in the target range for the federal funds rate in the near term or argued that to preserve credibility, such an increase should occur at the next meeting.

Meanwhile, the S&P 500 Futures traded 3.75 points higher to 2,204.50 by 12:30 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at -47.63 (lower than -75 represents bearish trend).