U.S. Treasuries plunge following Fed Chair Yellen’s hawkish testimony, FOMC speeches in focus

The U.S. Treasuries plunged Wednesday after the Federal Reserve Chair Janet Yellen presented a hawkish testimony before the Senate Banking Committee. Also, investors are awaiting a host of speeches by few members of the Federal Open Market Committee (FOMC) post Yellen, including that of Rosengren and Harker.

The yield on the benchmark 10-year Treasury rose nearly 1-1/2 basis points to 2.48 percent, the super-long 30-year bond yield also jumped 1-1/2 basis points to 3.07 percent while the yield on short-term 2-year note traded nearly 1/2 basis point higher at 1.24 percent.

"Ongoing gains in the labor market have been accompanied by a further moderate expansion in economic activity. U.S. real gross domestic product is estimated to have risen 1.9 percent last year, the same as in 2015. Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of households’ financial assets and homes, favorable levels of consumer sentiment, and low interest rates," Yellen said in her prepared testimony.

Further, her comments remained more hawkish than what markets had anticipated, further signalling monetary policy tightening in the near term.

"My colleagues on the FOMC and I expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2 percent. That said, the economic outlook is uncertain, and monetary policy is not on a preset course," she added.

Lastly, markets will now be looking forward to the release of January consumer inflation and retail sales data, due to be released later in the day.

Meanwhile, the S&P 500 Futures fell 0.03 percent or 0.75 points to 2,336.25 by 11:30GMT, while at 11:00GMT, the FxWirePro's Hourly Dollar Strength Index remained neutral at 74.66 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex