U.S. Treasury yields slide ahead of employment data

The U.S. Treasuries rallied on Friday, alongside a pullback in equities as markets looked to rebalance following the considerable selling was seen since the November US election.

Markets now look ahead to the December employment, expectations are pegged for a +175k non-farm payrolls increase, alongside a 4.7 percent unemployment result, accompanied by trade balance and factory orders releases to finish off the week.

The yield on the benchmark 10-year Treasury note fell 1-1/2 basis points to 2.35 percent, the super-long 30-year bond yield also dipped 1-1/2 basis points to 2.94 percent and the yield on short-term 2-year note slid 1 basis point to 1.17 percent by 12:00 GMT.

Minutes from the 13 - 14 December FOMC meeting indicated that most participants judged that a gradual pace of rate increases was likely to be appropriate to promote the Committee's objectives of maximum employment and 2 percent inflation (currently expected to be roughly 75 basis points of tightening over the course of 2017).

A gradual pace was also viewed by some participants as likely to be warranted because the proximity of the federal funds rate to the effective lower bound placed constraints on the ability of monetary policy to respond to adverse shocks to the aggregate demand for goods and services.

However, while viewing a gradual approach to policy firming as likely to be appropriate, participants emphasised the need to adjust the policy path as economic conditions evolved. They pointed to a number of risks that, if realised, might call for a different path of policy than they currently expected (highlighting increased uncertainty regarding fiscal and other economic policies). As to be expected policymakers are likely to maintain current views until further details surrounding fiscal policy are revealed.

Lastly, markets now look ahead to the ADP employment estimate, jobless claims and ISM non-manufacturing data on Thursday, ahead of the December employment report on Friday.

Meanwhile, the S&P 500 Futures traded 0.50 points lower at 2,263.5 by 12:10 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at -55.60 (lower than -75 represent a bearish trend).