U.S. Treasury yields turned lower overnight, dragging the benchmark 10-year yield 4.091%, the low end of the range since mid-January. The FOMC starts its 2-day meeting tomorrow and will culminate in its rate policy decision on Wednesday. No change is expected to the Fed’s 5.25% – 5.50% overnight target range, but the text of the statement will be scoured for hints of a shift to a more dovish stance, particularly any changes to the Fed’s tightening bias: ‘The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.’
The dollar is evenly mixed in narrow ranges vs. its G-10 counterparts, a replay of the previous few days leading to Wednesday’s rate decision. Dollar gains are concentrated vs. SEK, DKK, NOK, EUR, and GBP. The dollar index is +0.27% at 103.71, approaching the high end of its pre-FOMC range of 103.25/103.75.
Oil spiked to $79.29/barrel following a drone attack on a U.S. military base in Jordan tied to Iran-backed militias but has fallen back to $77.18/barrel and is -1.19% for the day. Widening the Middle East conflict has been supportive of oil prices which traded as low as $67.71/barrel as recently as December 13th.
Aside from the FOMC’s rate decision on Wednesday, this week’s economic data also includes tomorrow’s Consumer Confidence, Wednesday’s ADP Employment Change & MBA Mortgage Applications, Thursday’s Jobless Claims, and Friday’s Change in Nonfarm Payrolls, Unemployment Rate, Factory Orders, and Durable Goods Orders.