U.S. Treasuries gain ahead of retail sales, producer prices data

The U.S. Treasuries gained Friday ahead of the release of retail sales and producer price data later in the day. Also, investors are awaiting the Federal Open Market Committee (FOMC) member Patrick T. Harker’s speech late today.

The yield on the benchmark 10-year Treasury note fell 1 basis point to 2.35 percent, the super-long 30-year bond yield also fell 1/2 basis point to 2.95 percent and the yield on short-term 2-year note moved 1-1/2 basis points to 1.16 percent by 11:45 GMT.

Given the well anticipated move to raise rates at the December meeting, markets will look towards any significant benchmark measures of note (employment or otherwise) that could possibly provide a guide for policy moving forward. Though the Fed Funds rate is expected to remain exceptionally low for some time, the debate over the timing of the Fed’s next move is something that could receive additional clarity via these minutes.

We expect Treasuries will continue to drift lower in the coming weeks as markets look to assess the relative strength of data in 2017, something that could yield a slightly more aggressive Fed than was laid-out by the updated FOMC forecasts in December (already looking for 75 basis points of tightening over the course of the year).

Lastly, investors will remain keen to focus on the upcoming economic data and events, highlighted by consumer price inflation, industrial production and housing starts.

Meanwhile, the S&P 500 Futures traded 2.25 points or 0.10 percent higher at 2,265.75 by 11:55 GMT, while at 44:00GMT, the FxWirePro's Hourly Dollar Strength Index remained highly bearish at -106.08 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex