U.S. Treasuries lose ground on Donald Trump’s fiscal stimulus prospect; 10-year yields hit 2.52 pct

The U.S. 10-year Treasuries lost ground Friday following President Donald Trump’s continued stimulus prospects despite losses in equities and oil.

Also, markets remain keen to focus on the upcoming fourth quarter gross domestic product (GDP), scheduled to be released later in the day, besides the Federal Reserve’s first monetary policy meeting of 2017, scheduled to be held on February 1.

The yield on the benchmark 10-year Treasury climbed 1 basis point to 2.52 percent, the super-long 30-year bond yield also rose 1 basis point to 3.10 percent and the yield on short-term 2-year traded 1-1/2 basis points higher at 1.24 percent by 12:30 GMT.

We foresee that if the GDP comes in above 2 percent y/y, it could set the stage for next week’s FOMC meeting on February 1 to signal a Fed fund rate hike in March.  The United States Federal Reserve speakers weeks have delivered a hawkish tone overall, with three voting members this year (Harker, Evans and Brainard ) suggesting that three quarter-point hikes in rates over the course of 2017 was plausible. Fed Chair Yellen also spoke, although her comments were a little more balanced.

On the other hand, the U.S. President Donald Trump is also scheduled to unleash his budget proposals on February 6, which is widely expected to reveal the details which markets need to further propel Trump trades.

Meanwhile, the S&P 500 Futures traded 0.50 point or 0.02 percent lower at 2,293.50 by 12:30GMT, while at 12:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -4.09 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex