May 1, 2019 / 1:29 PM / 3 months ago

TREASURIES-Benchmark 10-year notes steady before Fed meeting

    * Fed meeting statement, press conference in focus
    * Treasury to sell $84 bln coupon-bearing supply next week
    * Employers added 275,000 jobs in April -ADP

    By Karen Brettell
    NEW YORK, May 1 (Reuters) - Benchmark 10-year notes were
steady on Wednesday as investors awaited the conclusion of the
Federal Reserve’s two-day policy meeting for further indications
of future interest rates.
    The Fed will issue a statement and Fed Chairman Jerome
Powell will give a news conference. Investors will look for
whether the U.S. central bank notes softening inflation, or
comments on market pricing on the path of future rate moves.
    “If there’s an acknowledgement about some of the weaker
inflation data that we’ve seen recently, particularly core PCE,
that would be a dovish outcome,” said Jon Hill, an interest rate
strategist at BMO Capital Markets in New York.
    Interest rate futures traders are currently pricing in a 64
percent chance of an interest rate cut by December, according to
the CME Group's FedWatch Tool.
    The Fed’s sudden pivot toward a dovish stance in March
stunned the market and prompted a rapid repricing for the
possibility of future rate cuts, instead of hikes.             
    Another focus will be whether the U.S. central bank cuts the
interest it pays on excess reserves (IOER) in a bid to prevent
the federal funds rate from drifting higher, as some analysts
expect.             
    The Treasury said on Wednesday that the U.S. government will
have to stop borrowing money between July and December if
Washington does not agree to raise the debt ceiling.
            
    It also said it plans to sell $84 billion in coupon-bearing
supply next week, including $38 billion in three-year notes, $27
billion in 10-year notes and $19 billion in 30-year bonds.
    Jobs data for April released on Friday will be closely
watched for further indications of wage pressures and the
strength of the labor market.
    U.S. private employers added 275,000 jobs in April, well
above economists' expectations and the most since last July, the
ADP National Employment Report showed on Wednesday.             

 (Editing by David Gregorio)
  
 
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