Plus   Neg

Treasuries Close Roughly Flat Following Choppy Trading Session

Treasuries showed a lack of direction over the course of the trading session on Wednesday before ending the day roughly flat.

Bond prices spent the trading day bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.720 percent.

The roughly flat close by treasuries came after the Federal Reserve announced its widely expected decision to leave interest rates unchanged.

The Fed's accompanying statement was seen as slightly more hawkish, reinforcing expectations the central bank will raise rates at its next meeting in March.

In the statement, the Fed said data received since its last meeting in December indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate.

The Fed also said inflation on a 12-month basis is expected to move up this year and stabilize around the 2 percent objective over the medium term.

The central bank reiterated that it expects economic conditions to evolve in a manner that will warrant further gradual increases in the federal funds rate.

"Janet Yellen's final policy meeting as Fed Chair pretty much summed up her entire tenure; policy was left accommodative but there were hints it will be tightened gradually in the future," said Michael Pearce, Senior U.S. Economist at Capital Economics.

He added, "The slightly more hawkish language in the statement is enough to confirm expectations of a March hike and adds weight to our view that the Fed will raise rates four times this year."

On the U.S. economic front, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of January.

ADP said employment in the private sector spiked by 234,000 jobs in January after surging up by a revised 242,000 jobs in December.

Economists had expected an increase of about 185,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.

A separate report from the National Association of Realtors showed pending home sales increased for the third consecutive month in December.

NAR said its pending home sales index climbed by 0.5 percent to 110.1 in December after rising by 0.3 percent to an upwardly revised 109.6 in November. Economists had expected the index to increase by 0.4 percent.

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, labor productivity, manufacturing activity and construction spending.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT