U.S. Government bonds trade lower for two successive days as OPEC agrees on output cut

The U.S. Government bonds saw downward pressure across the curve for two successive days after OPEC agreed at the meeting in Algeria to curb oil output for the first time since 2008.

The yield on the benchmark 10-year Treasury note rose 2-1/2 basis points to 1.593 percent, the yield on 5-year bond jumped 1-1/2 basis points to 1.144 percent and the yield on short-term 2-year note climbed 1 basis point to 0.766 percent by 12:10 GMT.

After Wednesday's informal OPEC meeting in Algeria resulted in a preliminary agreement, unexpectedly, to cut production (to 32.5-33m bpd), the front-month WTI future rose by about $2 to about $47.00, a 3-week high, which it has largely sustained so far today. Now the focus will be on the official meeting in Vienna on November 20.

This is the first agreement to cut production since the market crashed in 2014 on supply glut. The International benchmark Brent futures rose 4 percent to $49.06 and West Texas Intermediate (WTI) also bounced 4 percent to $47 from the yesterday’s closing session.

Moreover, Fed Chair Janet Yellen said the Fed is not seeing upward pressure on inflation, but said the jobless rate should fall further and the economy would eventually overheat. The Fed is on course to gradually remove accommodation, though without a fixed timetable. She said notes that a majority of FOMC members expect a rate hike this year. Meanwhile, December remains the central case for the next move.

Lastly, markets now look ahead to a greater flow of data on Thursday, highlighted by final 2Q16 GDP revisions, jobless claims and pending home sales.

Meanwhile, the S&P 500 Futures traded 5 points lower at 2,158.50 by 12:10 GMT.