U.S. Treasury yields plunge ahead of Fed monetary policy meeting

The U.S. Treasury yields plunged during Monday’s afternoon session ahead of the Federal Reserve’s monetary policy meeting, scheduled to be held on September 18 by 18:00GMT amid an otherwise muted trading session that witnessed data of little economic significance.

The yield on the benchmark 10-year Treasury yield edged plunged nearly 7 basis points to 1.831 percent, the super-long 30-year bond yield slumped nearly 7-1/2 basis points to 2.303 percent and the yield on the short-term 2-year plummeted 5-1/2 basis points to 1.747 percent by 11:20GMT.

Of course, all eyes in the coming week will be on the Fed’s latest policy announcement on Wednesday. While the target range for the Fed Funds Rate is widely expected to be lowered by 25bps to 1.75-2.00 percent, the Fed’s policy statement, updated economic forecasts and dot-plot charts, as well as Chair Powell’s post-meeting press conference will be closely watched for insight into the near-term policy path, Daiwa Capital Markets reported.

Data-wise, the US highlight will likely be tomorrow’s release of industrial production figures for August, which are expected to show total output reverse the 0.2 percent m/m drop seen in July, with similarly modest growth in manufacturing despite a steeper decline in the previous month.

Ahead of this the Empire Manufacturing index for September will come today. Meanwhile, the Philly Fed index and Conference Board’s leading indices and balance of payments data are due on Thursday. And housing market figures due in the coming week include the NAHB housing index (tomorrow), housing starts (Wednesday) and existing home sales (Thursday). In the markets, the Treasury will sell 10Y TIPS on Thursday, the report added.

Meanwhile, the S&P 500 Futures traded tad -0.45 percent lower at 2,995.12 by 11:25GMT.