U.S. Treasuries gain on uncertainty over Fed Chair appointment; investors await Yellen’s speech

The U.S. Treasuries remained firm Wednesday, following heightened uncertainty over the possible appointment of Fed Chair after Janet Yellen steps down from the position. Also, investors wait to watch the ADP non-farm employment change data for September and Fed Chair Janet Yellen’s speech, scheduled for today by 12:15GMT and 19:15GMT.

The yield on the benchmark 10-year Treasury slumped 2 basis points to 2.31 percent, the super-long 30-year bond yields slipped 1-1/2 basis points to 2.85 percent and the yield on short-term 2-year note also traded nearly 1-1/2 basis points lower at 1.46 percent by 10:40MT.

According to a Politico report, Fed Governor Jerome Powell is favored over former governor Kevin Warsh by U.S. Treasury Secretary Steven Mnuchin. Both Warsh and Powell were interviewed at the White House last week. While both are seen as serious candidates to replace current Chair Janet Yellen when her term expires in February, Powell is seen as more dovish than Warsh, who has criticised the Fed’s bond-buying programme in the past.

A more hawkish Fed candidate would likely prompt investors to bet on more aggressive normalization of the current loose monetary policy, to the dollar’s benefit.

Ahead of Friday’s release of the official labor market data, the ADP employment report will certainly be worth watching today to get a sense to what extent recent hurricanes knocked down the pace of job creation. The non-manufacturing ISM is also due. But arguably the most important event that day will be Yellen’s speech at the banking conference at the St Louis Fed.

Meanwhile, the S&P 500 Futures traded 0.04 percent lower at 2,530.75 by 10:45GMT, while at 10:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -21.36 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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