US Treasuries narrowly mixed ahead of Fed policymakers’ speech

The US Treasuries traded narrowly mixed Wednesday as investors await the Federal Reserve policymakers’ speech during a relatively quiet trading session. The yield on the benchmark 10-year Treasury note fell ½ basis point to 1.537 percent, the yield on 5-year note remained steady at 1.122 percent and the yield on short-term 2-year note rose ½ basis point to 0.738 percent by 12:20 GMT.

On Tuesday, the August ISM estimate of United States national non-manufacturing conditions revealed downward pressure in the composite index reading to 51.4 (lowest since January 2010), versus the unrevised 55.5 reading that occurred in July. This comes in below market expectations for a 55.0 result.

Last week, the August Labor Department employment situation report revealed a weaker +151k increase in non-farm payrolls, below market expectations for a +180k increase, as compared to the revised +275k result that occurred in July (previous was +255k).

This comes alongside no change in the unemployment rate at 4.9 percent, above expectations for a 4.8 percent result. Despite the weaker than expected headline result, this report shows lingering support for employment conditions.

Nevertheless, maintained improvement needs to be seen in order to alleviate caution on behalf of the FOMC regarding concerns elsewhere. Hence, we see this result as likely to provide enough weight to support the Fed leaving rates unchanged at the September FOMC meeting.

Meanwhile, the S&P 500 Futures traded 3 points lower at 2,182 by 12:20 GMT.