US Treasuries strengthen on dovish FOMC minutes; robust job data bridles yields' fall

The US Treasuries saw continued upward pressure across much of the curve following the release of dovish July Federal Reserve meeting minutes, highlighting that a rate hike in September would be highly unlikely.

On the other hand, fewer jobless claims application last week limited the fall in bond yields.

The yield on the benchmark 10-year Treasury note fell 1 basis point to 1.551 percent, the yield on 5-year note dipped 1-1/2 basis points at 1.131 percent and the yield on short-term 2-year note also slid 1-1/2 basis points at 0.722 percent by 12:40 GMT.

Minutes from the 26 – 27 July FOMC meeting indicated that FOMC officials were split on whether a rate hike was needed soon. Overall, many judged that it was appropriate to wait for additional information that would allow them to evaluate the underlying momentum in economic activity and the labour market and whether inflation was continuing to rise gradually to 2 percent as expected.

However, several participants suggested there would likely be ample time to react if inflation rose more quickly than they currently anticipated, and they preferred to defer another increase in the federal funds rate until they were more confident that inflation was moving closer to 2 percent on a sustained basis.

On balance, participants generally indicated that their economic forecasts had changed little over the intermeeting period, continuing to anticipate that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labour market indicators would strengthen.

In term of recent economic data release, the US initial jobless claims for the week ending 12 August 2016 came at 262k, lower than the expectations of 265k, from 266k in the previous week, highlighting the US job market remains healthy.

Meanwhile, the S&P 500 Futures traded 2.25 points lower at 2,177.50 by 12:40 GMT.