U.S. Treasuries move slightly lower in response to modest improvement in global equities, hawkish shift in short-term Fed rate hike expectations

The U.S. Treasuries moved slightly lower in response to a modest improvement in global equity markets and a hawkish shift in short-term Fed rate hike expectations, with short-dated paper underperforming and the yield curve tilting slightly flatter.

The yield on the benchmark 10-year Treasury, which moves inversely to its price, climbed 1-1/2 basis points to 2.24 percent, the super-long 30-year bond yields rose 1/2 basis point to 2.90 percent while the yield on short-term 2-year note traded 2 basis points higher at 1.28 percent by 11:40GMT.

Market risk sentiment improved modestly in early trade on Friday. However, cautiousness prevails as political turbulence around US President Donald Trump continues with investors eagerly awaiting former-FBI Director James Comey’s testimony at a Senate hearing next week.

In FX markets, the USD gained some ground supported by Thursday’s US positive data and hawkish comments by Cleveland Fed President Loretta Mester.

The slightly positive mood when US equity markets opened after yesterday’s drop contributed to halt the downward trend in EZ equity indices (which recovered some ground from today’s lowest levels) and to leave bond markets almost unchanged (US and EZ). The USD appreciated, partly offsetting yesterday’s falls, although it remains at its weakest level against the EUR within 2017.

Meanwhile, the S&P 500 Futures traded 0.23 percent higher at 2,369.00 by 11:40GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -68.85 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex