U.S. Treasuries plunge ahead of FOMC’s monetary policy decision, 5-year auction

The U.S. Treasuries plunged during Wednesday’s afternoon session, ahead of the Federal Reserve’s monetary policy meeting today at 18:00GMT. Also, investors shall be looking forward to the country’s 5-year TIPS auction, scheduled to be held on June 20 by 17:00GMT for further direction in the debt market.

The yield on the benchmark 10-year Treasury yield jumped 2-1/2 basis points to 2.084 percent, the super-long 30-year bond yields edged nearly 1 basis point higher to 2.559 percent and the yield on the short-term 2-year surged 3 basis points to 1.893 percent by 11:30GMT.

From a market perspective, of course, everything else today pales into insignificance compared to the announcements from the Fed, which should either lend credence to – or provoke strong doubts about – current market pricing, which suggests the likelihood of a 25bp rate cut as soon as next month and further easing of up to 50bps by year-end, Daiwa Capital Markets reported.

So, while the Fed Funds Rate target range seems bound to be left unchanged at 2.25-2.50 percent, the updated forecasts, dot-plots (which previously showed that six FOMC members expected further policy tightening this year), statement and press conference will be closely scrutinised for clues as to the likelihood of a near-term rate cut, the report added.

Meanwhile, the S&P 500 Futures traded steady at 2,925.12 by 11:35GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at -22.56 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex