U.S. Treasury yields plummet on Fed rate cut hangover; weekly initial jobless claims eyed

The U.S. Treasury yields plummeted during Thursday’s afternoon session, following hangover effect from the Fed’s overnight monetary policy meeting, where it adopted a 25bp rate cut, albeit signalling a pause in months ahead.

On the economic front, today will receive the country’s weekly initial jobless claims and personal consumption expenditure (PCE), both scheduled to be released by 12:30GMT. Also, the Chicago PMI for October, due today at 13:45GMT, shall provide extra direction to the debt market.

The yield on the benchmark 10-year Treasury yield plunged 5-1/2 basis points to 1.742 percent, the super-long 30-year bond yield plummeted 6 basis points to 2.212 percent and the yield on the short-term 2-year slumped nearly 4 basis points to 1.592 percent by 11:30GMT.

There was somewhat mixed reaction to the conclusion of yesterday evening’s FOMC meeting, where the FFR target range was cut for the third time this year by 25bps to 1.50-1.75 percent as had been expected, but the policy statement and Chair Powell’s press conference implied that the Committee is not ‘contemplating’ a further change in the path of policy over the near term, Daiwa Capital Markets reported.

Initially, US yields rallied towards the top of recent ranges and the USD followed, but price action quickly turned around as the hurdle to raise rates is very high and downside risks to the economy remain at this time. The USD has subsequently come under significant pressure to test important technical support regions, Lloyds Bank reported.

Meanwhile, the S&P 500 Futures remained nearly tad -0.27 percent down at 3,039.38 by 11:35GMT.