U.S. Treasuries jump on rising bets of less-hawkish Fed Governor Powell as next Fed Chair

The U.S. Treasuries jumped Monday on rising bets over the appointment of Federal Reserve Governor Jerome Powell as the next Fed Chair after Janet Yellen’s term ends in February 2018. As far as the FOMC announcement is concerned, there is little prospect of any change in policy but investors will still analyze the accompanying statement to see whether a hike remains likely at the December FOMC meeting.

The yield on the benchmark 10-year Treasury slumped 3 basis points to 2.39 percent, the super-long 30-year bond yields plunged nearly 2-1/2 basis points to 2.91 percent and the yield on short-term 2-year note traded 1 basis point lower at 1.59 percent by 11:20GMT.

An eventful week lies ahead in the US, with Trump’s Fed Chair nomination and a more detailed tax reform proposal likely to come along with the scheduled announcement of the outcome of the latest FOMC meeting on Wednesday and the October employment report scheduled for release on Friday.

As regards the employment report, the consensus expectation is for non-farm payrolls to have rebounded by more than 300k, from the storm-impacted drop of 40k reported in September. Plenty of interest will center on the unemployment and earnings figures too, not least with the latter having posted a surprisingly firm 0.5 percent m/m increase in September.

Looking at the rest of the coming week’s US data diary, notable releases include the September personal income/PCE deflator (today); the Q3 Employment Cost Index and the October Conference Board consumer survey and Chicago PMI (Tuesday); the October manufacturing ISM, ADP employment report and September construction spending (Wednesday); October auto sales and Q3 labour productivity (Thursday); and the October non-manufacturing ISM and full September trade report (Friday).

Meanwhile, the S&P 500 Futures traded 0.23 percent lower at 2,572.38 by 11:25GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 67.65 (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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