U.S. Treasuries gain ahead of FOMC members’ speech, weak energy prices lend support

The U.S. Treasuries gained Monday as investors remain cautious ahead of the Federal Open Market Committee (FOMC) members’ speech later in the day. Also, weakness in global crude oil prices lent support to the U.S. debt market.

The yield on the benchmark 10-year Treasury note fell 2-1/2 basis points to 2.39 percent, the super-long 30-year bond yield also dipped 2-1/2 basis points to 2.98 percent and the yield on short-term 2-year note slid more than 1 basis point to 1.20 percent by 12:00 GMT.

Markets now look ahead to a lighter flow of data in the week ahead, highlighted by producer prices, retail sales, business inventories and University of Michigan consumer sentiment releases on Friday.

In addition, U.S. average hourly earnings rose 0.4 percent m/m, while non-farm payrolls came in at 156,000, lower than market expectations of 178,000. Further, the rate of unemployment December slightly rose to 4.7 percent, from 4.6 percent in November.

Fed Funds futures discount a 24 percent chance of a Fed rate hike in March [according to CME calculations using late Friday data], which is up from 80 percent the day before Friday's US employment report but about the same as on 3-4 January, while still below pricing on 15 December.

Meanwhile, the S&P 500 Futures traded 2.75 points lower at 2,268.75 by 12:10 GMT, while at 12:00GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bearish at -103.47 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex