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The U.S. Treasuries lost after the Federal Reserve decided to hike the Fed funds rate by 25 basis points to 1.00-1.25 percent, despite a fall in the country’s consumer inflation. Also, expectations of a fall in the initial jobless claims, due later today weighed on safe-haven assets.
The yield on the benchmark 10-year Treasury, rose nearly 1-1/2 basis points to 2.15 percent, the super-long 30-year bond yields climbed 1 basis point to 2.79 percent and the yield on short-term 2-year note traded 1 basis point higher at 1.35 percent by 11:10GMT.
The FOMC raised the Federal Funds rate by 25 basis points to 1.00-1.25 percent, as expected, and provided some details on how it plans to start reducing its balance sheet "relatively soon". The medium-term interest rate projections were unchanged suggesting one more hike by the end of this year and three hikes in 2018 and 2019 respectively.
The updated Summary of Economic Projections was largely in line with expectations containing a few mild surprises, mainly an upward revision in 2017 real GDP forecast to 2.2 percent from 2.1 percent and a significant downward reassessment in 2017 PCE inflation projection to 1.6 percent from 1.9 percent.
Further, the Fed’s relatively more hawkish than expected tone favoured USD while global equity markets were under pressure in early trade on the back of poor US data and reports conveying that the US President is under investigation.
Lastly, the country’s initial jobless claims for the week ending June 3 fell 10k to 245k, modestly above consensus estimates of 240k. Claims data for the prior week were revised higher by 7k to 255k. This left the four-week moving average at 242k, in line with where the series has been since late January.
Meanwhile, the S&P 500 Futures traded 0.65 percent lower at 2,419.50 by 11:40GMT, while at 12:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 38.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
