US Treasuries slump on hawkish comments from Fed officials

The US Treasuries saw downward pressure across the curve during a relatively quiet Monday session light on significant economic data. Also, investors drove out from safe-haven buying after US Fed rate hike speculation gathered steam following hawkish comments from the Fed policymakers.

Markets look ahead to more significant economic data in this week, highlighted by durable goods order data on Wednesday and preliminary GDP revisions on Friday.

However, these releases are likely to be greatly overshadowed by Fed Chair Yellen’s speech at the Jackson Hole Symposium on Friday. The yield on the benchmark 10-year Treasury note rose 1/2 basis point to 1.581 percent, the yield on 5-year note climbed nearly 2 basis points at 1.177 percent and the yield on short-term 2-year note also bounced 1-1/2 basis points at 0.762 percent by 12:30 GMT.

Federal Reserve Vice Chairman Stanley Fischer stroke a hawkish tone during a speech in Colorado, saying that, looking ahead, he expects GDP growth to pick up in the coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes.

Moreover, Fischer signalled that this year interest rate hike is still on the table and added that the US economy is very near to meeting the Federal Reserve’s goals.

Last week, the US Fed’s William Dudley (voter in 2016) said that his overall views have not changed much and that he is looking for stronger second half of 2016 growth than was seen to start the year.

In addition, Dudley reiterated that the US economy is edging closer towards the point where it will be appropriate to raise interest rates further, noting that September was possible. He also added that the Fed Funds futures were underpricing the likelihood of policy tightening.

Meanwhile, the S&P 500 Futures traded 2.75 points lower at 2,178 by 12:30 GMT.