US Treasuries little changed ahead of UK's Brexit vote on EU

The US Treasuries were little changed on Wednesday, finding modest downward pressure in the wake of the first leg of Fed Chair Yellen’s semi-annual monetary policy testimony before Congress (before the Senate Banking Committee).

As expected, Yellen chose to avoid drifting far away from tone set by the June FOMC statement, highlighting some concern regarding slower employment gains and maintaining a sense of continued caution that the Fed has chose to adopt in determining the future of interest rates.

The yield on the benchmark 10-year Treasury note hover around 1.69 percent mark and the yield on short-term 2-year note remained steady at 0.759 percent by 12:30 GMT.

In US Fed Chair Yellen prepared testimony before the Senate Banking Committee, Yellen said since her last semi-annual testimony before Congress, the economy has made further progress toward the Fed's objective of maximum employment. And while inflation has continued to run below our 2 percent objective, the FOMC expects inflation to rise to that level over the medium-term.

However, the pace of improvement in the labour market appears to have slowed more recently, suggesting that our cautious approach to adjusting monetary policy remains appropriate. Yellen added that proceeding cautiously in raising the federal funds rate will allow the Fed to keep monetary support to economic growth in place while the Fed assesses whether growth is returning to a moderate pace, whether the labour market will strengthen further, and whether inflation will continue to make progress toward the Fed's 2 percent objective.

Following Fed Chair Yellen's testimony, the implied probability of a US rate hike by year-end was little changed at 48 percent vs 46 percent earlier in the day, according to Bloomberg's calculations based on Fed Funds futures.

Markets now look ahead to Fed Chair Yellen’s appearance before the House Financial Services committee on Wednesday, though should not expect a great deal of fireworks from the affair (other than the sometimes odd questions coming from the committee).

In terms of data, markets now look ahead to existing home sales, followed by a 7-year Note auction later in the session. Dwarfing all of this will likely be the coming UK referendum on whether or not to break away from the EU, with markets likely holding steady until it passes.

Meanwhile, the S&P 500 Futures up 2 points to 2,082 by 12:30 GMT.