US Treasuries snap two day gains on firm risk sentiments

The US Treasuries traded modestly lower on Tuesday as investors cooled on safe-haven instruments amid gains in riskier assets including crude oil and equities. The yield on the benchmark 10-year Treasury note rose 1 basis point to 1.470 percent and the yield on short-term 2-year note climbed 2 basis points to 0.625 percent by 12:50 GMT.

The final 1Q16 GDP reading increased +1.1 percent (preliminary: +0.8 percent), versus the unrevised +1.4 percent reading seen in 4Q15, just above market expectations for a +1.0 percent result.

Personal consumption increased +1.5 percent (preliminary: +1.9 percent), versus the +2.4 percent reading seen in 4Q15. Core PCE increased +2.0 percent, following the +1.3 percent increase seen in 4Q15. Residential investment increased +15.6 percent in 1Q16, versus the +10.1 percent seen in 4Q15.

Also, exports increased +0.3 percent in 1Q16, alongside a -0.5 percent decrease from imports. According to the release, downward pressure from private inventories contributed -0.23 percent to the headline estimate, versus -0.22 percent seen in 4Q15.

Despite the upward revisions seen in the headline measure, this report clearly reflects the weaker tone of data seen to open the year. Although a number of releases continue to reflect current economic dampness, the potential for a rebound in inventories in the months ahead should provide a boost to growth as we move further into 2016.

Today, oil prices rose as investors took advantage of a two-day slide in crude following Britain's vote to leave the European Union to lock in lower prices. A looming strike at several Norwegian oil and gas fields threatened to cut output in western Europe's biggest producer, also helped support prices on Tuesday. The International benchmark Brent futures rose 2.62 percent to $49.02 and West Texas Intermediate (WTI) climbed 3.04 percent to $47.74 by 12:50 GMT.

Moreover, US Fed Funds futures discount a 9 percent chance of a 25 basis points rate hike by end-year and a 24 percent chance of a rate cut by the September FOMC meeting, according to Bloomberg calculations.

Meanwhile, the S&P 500 Futures up 25.25 points to 2,010.25 by 12:50 GMT.