Edition:
United States

Kate Duguid

Dollar recovers after walk-back of dovish Fed comments

10:25am EDT

NEW YORK The U.S. dollar rose in early trading on Friday, swinging back into positive territory after the New York Federal Reserve walked back dovish comments from its president the prior day, which had bolstered expectations of an aggressive interest rate cut this month.

Netflix sinks on subscriber losses, analysts still see growth

5:22am EDT

Wall Street brokerages stuck to a positive outlook on Netflix Inc on Thursday, betting that a strong content slate for the rest of 2019 would reverse shock second-quarter losses in U.S. subscribers that sank its stock price. | Video

TREASURIES-Yield curve steeper, rate cut bets unmoved by inflation gain

Jul 12 2019

(Updates yields, table) By Kate Duguid NEW YORK, July 12 The U.S. yield curve was slightly steeper on Friday, with yields largely unmoved by stronger-than-expected producer price data as market expectations of an interest rate cut this month held firm. U.S. producer prices rose slightly in June even as the cost of energy and other goods dropped for a second straight month, beating economists' expectations that prices would be unchanged. The Labor Department report comes on the heels of strong consumer price data published on Thursday, suggesting overall inflation could continue to rise moderately despite the gains in consumer prices. Inflation has consistently undershot the Federal Reserve's 2% target and has been cited by the central bank as a risk as it weighs cutting interest rates in July for the first time since 2008. But market expectations of a rate cut were not swayed by the evidence of some inflationary pressure. "The trend is what the (Fed) committee wants to see. But in a week where we heard Chairman Powell basically say that the very strong labor market data was a positive print and that's it, one individual dataset will not sway or set the committee's outlook going forward," said Michael Lorizio, senior fixed income trader at Manulife Investment Management. "You probably have to keep that in mind looking at the inflation data over yesterday and today." Fed Chairman Jerome Powell, in testimony to Congress on Wednesday, set the stage for a rate cut this month, focusing particularly on the threat the U.S.-China trade war poses to the economy while highlighting broader global weakness. Powell downplayed a strong June jobs report and dismissed claims that the U.S. labor market is hot. The Fed's policy-setting committee will next meet on July 30-31. The two-year Treasury note yield, which reflects market sentiment about changes in interest rate policy, was down about a basis point to 1.843%. The benchmark 10-year note yield fell less than the 2-year, down half a basis point to 2.115%. The 30-year bond yield was up half a basis point to 2.644%. Expectations of a 50-basis-point interest-rate cut in July rose modestly, to 23.5% from 19.9% on Thursday, according to CME Group's FedWatch Tool. A 25-point cut has been fully priced in by the market. Friday, July 12, at 1435 EDT (1835 GMT): Price US T BONDS SEP/d 153-18/32 1/32 10YR TNotes SE/d 127-16/256 3/32 Price Current Net Yield % Change (bps) Three-month bills 2.105 2.1451 -0.012 Six-month bills 2.0225 2.077 -0.006 Two-year note 99-148/256 1.8451 -0.007 Three-year note 99-202/256 1.8226 -0.010 Five-year note 99-116/256 1.8659 -0.010 Seven-year note 99-86/256 1.9776 -0.010 10-year note 102-76/256 2.1149 -0.005 30-year bond 104-188/256 2.6445 0.006 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 26.80 -0.40 30-year vs 5-year yield 77.80 1.35 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 3.50 -0.75 spread U.S. 3-year dollar swap 1.00 -0.25 spread U.S. 5-year dollar swap -1.25 -0.50 spread U.S. 10-year dollar swap -6.25 -1.00 spread U.S. 30-year dollar swap -34.75 -1.75 spread (Reporting by Kate Duguid; Editing by Andrea Ricci and Leslie Adler)

TREASURIES-Yield curve steeper, rate cut bets unmoved by inflation gain

Jul 12 2019

(Updates to reflect movement in yields) By Kate Duguid NEW YORK, July 12 The U.S. yield curve was slightly steeper on Friday, with yields largely unmoved by stronger-than-expected producer price data as market expectations of an interest rate cut in July held firm. U.S. producer prices rose slightly in June even as the cost of energy and other goods dropped for a second straight month, beating economists' expectations that prices would be unchanged. The Labor Department report comes on the heels of strong consumer price data published on Thursday, suggesting overall inflation could continue to rise moderately despite the gains in consumer prices. Inflation has consistently undershot the Fed's target and has been cited by the central bank as a risk as it weighs cutting interest rates in July for the first time since 2008. But market expectations of a rate cut were not swayed by the evidence of some inflationary pressure. "The trend is what the committee wants to see. But in a week where we heard (Fed) Chairman (Jerome) Powell basically say that the very strong labor market data was a positive print and that's it, one individual dataset will not sway or set the committee's outlook going forward," said Michael Lorizio, senior fixed income trader at Manulife Investment Management. "You probably have to keep that in mind looking at the inflation data over yesterday and today." Powell on Wednesday delivered testimony to Congress in which he set the stage for a rate cut this month, focusing particularly on the threat the U.S.-China trade war poses to the economy, while highlighting broader global weakness. Powell also downplayed a strong June jobs report and dismissed claims that the U.S. labor market is hot. The two-year Treasury note yield, which reflects market sentiment about changes in interest rate policy, was down less than a basis point to 1.847%. Longer-dated maturities gained, with the benchmark 10-year note yield up half a basis point to 2.125%, and the 30-year bond yield up 1.4 basis points to 2.653%. Expectations of a 50-basis point interest-rate cut in July rose modestly, up to 24.5% from 19.9% on Thursday, according to CME Group's FedWatch Tool. A 25-point cut has been fully priced in by the market. "The market reaction is probably what one would expect on a beat, which is minor bearish pressure and not much more," said Lorizio. July 12 Friday 12:02PM New York / 1602 GMT Price US T BONDS SEP/d 153-11/32 -6/32 10YR TNotes SE/d 127 1/32 Price Current Net Yield % Change (bps) Three-month bills 2.105 2.1451 -0.012 Six-month bills 2.025 2.0796 -0.003 Two-year note 99-147/256 1.8471 -0.005 Three-year note 99-196/256 1.8307 -0.002 Five-year note 99-106/256 1.8742 -0.002 Seven-year note 99-68/256 1.9885 0.000 10-year note 102-52/256 2.1254 0.005 30-year bond 104-144/256 2.6526 0.014 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 27.70 0.45 30-year vs 5-year yield 77.70 1.30 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.25 0.00 spread U.S. 3-year dollar swap 1.25 0.00 spread U.S. 5-year dollar swap -0.75 0.00 spread U.S. 10-year dollar swap -5.50 -0.25 spread U.S. 30-year dollar swap -34.00 -1.00 spread (Reporting by Kate Duguid; Editing by Dan Grebler and Andrea Ricci)

TREASURIES-Yields inch up, rate cut bets unmoved by inflation gain

Jul 12 2019

By Kate Duguid NEW YORK, July 12 Treasury yields rose modestly on Friday, largely unmoved by stronger-than-expected producer price data as market expectations of an interest rate cut in July held firm. U.S. producer prices rose slightly in June as the cost of energy and other goods dropped for a second straight month, beating economists' expectations that prices would be unchanged. The Labor Department report comes on the heels of strong consumer price data published on Thursday, suggesting overall inflation could continue to rise moderately despite the gains in consumer prices. Inflation has consistently undershot the Fed's target and has been cited by the central bank as a risk as it weighs cutting interest rates in July for the first time since 2015. But market expectations of a rate cut were not swayed by the evidence of some inflationary pressure. "The trend is what the committee wants to see. But in a week where we heard (Fed) Chairman (Jerome) Powell basically say that the very strong labor market data was a positive print and that's it, one individual dataset will not sway or set the committee's outlook going forward," said Michael Lorizio, senior fixed income trader at Manulife Investment Management. "You probably have to keep that in mind looking at the inflation data over yesterday and today." Powell on Wednesday delivered testimony to Congress in which he set the stage for a rate cut this month, focusing particularly on the threat the U.S.-China trade war poses to the economy, while highlighting broader global weakness. Powell also downplayed a strong June jobs report and dismissed claims that the U.S. labor market is hot. The two-year Treasury note yield, which reflects market sentiment about changes in interest rate policy, was up less than half a basis point to 1.855%. Gains were slightly larger at the long end of the yield curve, with the benchmark 10-year note up 1.1 basis points to 2.131%, and the 30-year bond yield up 1.8 basis points to 2.657%. Expectations of a 50-basis point interest-rate cut in July rose modestly, up to 24.5% from 19.9% on Thursday, according to CME Group's FedWatch Tool. A 25-point cut has been fully priced in by the market. "The market reaction is probably what one would expect on a beat, which is minor bearish pressure and not much more," said Lorizio. July 12 Friday 10:15AM New York / 1415 GMT Price US T BONDS SEP/d 153-11/32 -6/32 10YR TNotes SE/d 126-248/256 -1/32 Price Current Net Yield % Change (bps) Three-month bills 2.1075 2.1477 -0.009 Six-month bills 2.025 2.0796 -0.003 Two-year note 99-143/256 1.8553 0.003 Three-year note 99-190/256 1.8387 0.006 Five-year note 99-100/256 1.8792 0.003 Seven-year note 99-60/256 1.9933 0.005 10-year note 102-40/256 2.1306 0.011 30-year bond 104-116/256 2.6578 0.019 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 27.40 0.20 30-year vs 5-year yield 77.70 1.30 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.25 0.00 spread U.S. 3-year dollar swap 1.25 0.00 spread U.S. 5-year dollar swap -0.75 0.00 spread U.S. 10-year dollar swap -5.25 0.00 spread U.S. 30-year dollar swap -33.50 -0.50 spread (Reporting by Kate Duguid; Editing by Dan Grebler)

TREASURIES-U.S. yields climb after weak bond auction, inflation pickup

Jul 11 2019

(New throughout, updates yields and market activity, adds auction news, analyst comments) By Kate Duguid NEW YORK, July 11 U.S. Treasury yields rose, with the biggest gains in long-dated maturities, after Thursday's auction of $16 billion 30-year bonds met weak demand and U.S. underlying consumer prices recorded their biggest gain in 1-1/2 years. Indirect bidders, including foreign central banks, took the smallest percentage of a 30-year offering since February 2015. The 30-year yield jumped to a session high following the sale and was last up 7.1 basis points to 2.642%. Analysts attributed the weak demand to the high price of the maturity going into the sale. Earlier, the bond shrugged off the U.S. Labor Department report that its consumer price index excluding the volatile food and energy components in June posted the largest increase since January 2018. Inflation has consistently undershot the Fed's target. The central bank has cited that as a risk as it weighs cutting interest rates in July for the first time since 2015. The market still expects an interest rate cut at the end of July. "The Fed has left itself two paths to a rate cut. One is inflation-shortfall-based and that is fading with this morning's CPI data. The other is insurance-based," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "It seems policymakers are more focused on an insurance rate cut - insurance against future growth shortfall." That explains the market's muted reaction. The two-year yield, a proxy for market expectations of changes in rate policy, rose modestly, last up 2.8 basis points to 1.854%. The benchmark 10-year was last up 6.3 basis points to 2.124%. "From the Fed's perspective, I don't think it really mattered. It doesn't really matter what numbers that come in between now and July 31 - something dramatic would have to happen. A slight uptick in core CPI isn't going to do the trick," said Kevin Flanagan, head of fixed income strategy at WisdomTree. The chance of a 50-basis point cut fell on Thursday to 20.4% from 29.2% on Wednesday, according to CME Group's FedWatch tool. A 25-point cut has been fully priced in by the market, and was not altered by the inflation report. Thursday, July 11, at 1509 EDT (1909 GMT): Price US T BONDS SEP/d 153-15/32 -38/32 10YR TNotes SE/d 126-252/256 -15/32 Price Current Net Yield % Change (bps) Three-month bills 2.11 2.1507 -0.039 Six-month bills 2.0275 2.0825 0.010 Two-year note 99-143/256 1.8544 0.028 Three-year note 99-192/256 1.836 0.038 Five-year note 99-100/256 1.879 0.050 Seven-year note 99-64/256 1.9908 0.058 10-year note 102-56/256 2.1238 0.063 30-year bond 104-192/256 2.6438 0.073 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 26.80 3.80 30-year vs 5-year yield 76.20 1.55 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.00 0.00 spread U.S. 3-year dollar swap 1.25 0.25 spread U.S. 5-year dollar swap -0.75 0.75 spread U.S. 10-year dollar swap -5.25 0.25 spread U.S. 30-year dollar swap -33.00 -0.75 spread (Reporting by Kate Duguid; Editing by David Gregorio)

TREASURIES-Yields little changed by jump in U.S. consumer prices

Jul 11 2019

By Kate Duguid NEW YORK, July 11 The Treasury market on Thursday brushed off the biggest gain in U.S. underlying consumer prices in 1-1/2 years, as it did little to change expectations the Federal Reserve will cut interest rates later this month. The Labor Department reported its consumer price index - excluding the volatile food and energy components - rose 0.3% in June. That is the largest increase since January 2018 and followed four straight monthly gains of 0.1%. The so-called core CPI was boosted by strong increases in the prices for apparel, used cars and trucks, as well as household furnishings. Inflation has consistently undershot the Fed's 2% target and has been cited as a risk by the central bank as it weighs cutting interest rates in July for the first time since 2015. "The Fed has left itself two paths to a rate cut. One is inflation-shortfall-based and that is fading with this morning's CPI data. The other is insurance-based," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. On Wednesday, Fed Chair Jerome Powell delivered testimony to Congress and the bank published minutes from its rate-setting committee's June meeting, both of which cite the risks of slowing global growth and the U.S. trade war with China. "It seems policymakers are more focused on an insurance rate cut - insurance against future growth shortfall." That explains the market's lack of a reaction to the inflation data. The two-year yield, a proxy for market expectations of changes in rate policy, rose initially, but retraced most of those gains, last up less than a basis points at 1.836%. The benchmark 10-year made less of an initial move, but retained the gains, with its yield last up 1.6 basis points at 2.077%. The chance of a 50-basis point cut fell on Thursday to 24.5% from 29.2% on Wednesday, according to CME Group's FedWatch tool. A 25-point cut has been fully priced in by the market, however, and was not altered by the inflation report. "You have to guess Jay Powell had this data point on his desk yesterday," said LeBas. Later Thursday, the Treasury Department will auction $16 billion of 30-year notes. Demand is expected to be strong: "The 30-year has been soft for the last couple days ... so I think we're setting up for pretty good demand at auction," said LeBas. July 11 Thursday 10:10AM New York / 1410 GMT Price US T BONDS SEP/d 154-4/32 -17/32 10YR TNotes SE/d 127-60/256 -7/32 Price Current Net Yield % Change (bps) Three-month bills 2.1225 2.1635 -0.026 Six-month bills 2.025 2.0799 0.008 Two-year note 99-152/256 1.836 0.010 Three-year note 99-214/256 1.8064 0.008 Five-year note 99-146/256 1.8409 0.012 Seven-year note 99-140/256 1.9448 0.012 10-year note 102-168/256 2.0751 0.014 30-year bond 105-228/256 2.5903 0.019 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 23.60 0.55 30-year vs 5-year yield 74.90 0.10 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 3.75 -0.25 spread U.S. 3-year dollar swap 1.50 0.50 spread U.S. 5-year dollar swap -1.00 0.50 spread U.S. 10-year dollar swap -5.50 0.00 spread U.S. 30-year dollar swap -32.75 -0.50 spread (Reporting by Kate Duguid)

TREASURIES-Fed's global growth concerns steepen yield curve

Jul 10 2019

(New throughout; adds FOMC minutes news, analyst quote; updates yields) By Kate Duguid NEW YORK, July 10 The U.S. Treasury yield curve steepened on Wednesday after the Federal Reserve's concerns about global growth increased expectations that the U.S. central bank may cut rates more sharply than expected in July. The concerns were expressed in Chair Jerome Powell's prepared remarks to a congressional committee which were published Wednesday morning, with the minutes from the Federal Open Market Committee's June meeting out at 2 p.m. EST. The chance of a 50-basis point cut rose to 28.7% from 3.3% on Tuesday, according to CME Group's FedWatch tool, while the chance of a 25-point cut in July fell to 71.4%. Powell's testimony said the Fed stands ready to "act as appropriate" to sustain a decade-long economic expansion. He contrasted the "baseline outlook" of continued U.S. growth against risks including persistently weak inflation, slower growth in other major economies and a downturn in business investment driven by uncertainty over the Trump administration's trade war with China. That view echoed the position of multiple policymakers at the FOMC's June 18-19 meeting, who said rates should come down to "cushion the effects" of a U.S. trade war and to firm up inflation, the records published Wednesday showed. The two-year Treasury yield, a proxy for market sentiment about interest rate policy, was last 7.7 basis points lower at 1.828%. While yields on short-dated notes fell, those on longer maturities rose, steepening the yield curve and ending a multi-day flattening trend. Wednesday's dovish message dispelled fears that June's strong employment data published July 5 could change Fed thinking about the state of the economy. "The market is focused on the part of Powell's testimony where he says 'uncertainties continue.' And that led the market to think that uncertainty alone, rather than the incoming data, is enough to get them to move, likely 25 basis points, at the end of this month," said Michael Pond, head of global inflation-linked research at Barclays in New York. The spread between two- and 10-year yields was last up to 23.5 basis points, its highest in a week. It hit a month low of 14.2 basis points on Tuesday. "It's really more about the global economy than it is about the U.S. economy right now," said Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research. "The slowdown in China and the big slowdown in manufacturing in Europe, those are the big factors you've got to keep an eye on." Also on Wednesday, the Treasury Department auctioned off $24 billion of new 10-year notes to average demand. Indirect bidders took 60.76% of the offering, direct bidders took 12.85% and primary dealers took 26.39%. July 10 Wednesday 3:09PM New York / 1909 GMT Price US T BONDS SEP/d 154-22/32 -13/32 10YR TNotes SE/d 127-112/256 5/32 Price Current Net Yield % Change (bps) Three-month bills 2.1425 2.1841 -0.070 Six-month bills 2.0175 2.0723 -0.068 Two-year note 99-157/256 1.8256 -0.079 Three-year note 99-220/256 1.7984 -0.068 Five-year note 99-160/256 1.8292 -0.042 Seven-year note 99-160/256 1.9327 -0.019 10-year note 102-196/256 2.063 0.007 30-year bond 106-72/256 2.5721 0.039 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 23.50 8.10 30-year vs 5-year yield 74.20 8.25 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 4.25 2.25 spread U.S. 3-year dollar swap 1.25 1.00 spread U.S. 5-year dollar swap -1.25 2.00 spread U.S. 10-year dollar swap -5.50 1.00 spread U.S. 30-year dollar swap -31.75 0.50 spread (Reporting by Kate Duguid; Editing by David Gregorio)

TREASURIES-Yield curve steepens; Fed chief remarks boost rate cut bets

Jul 10 2019

(New throughout, updates market activity, adds Fed details and analyst comments) By Kate Duguid NEW YORK, July 10 The U.S. Treasury yield curve steepened on Wednesday after Federal Reserve Chair Jerome Powell increased expectations that the U.S. central bank may cut rates more sharply than expected in July. Powell's prepared remarks to a congressional committee were published Wednesday morning. The chance of a 50 basis point cut rose to 21.4 percent from 3.3 percent on Tuesday, according to CME Group's FedWatch tool, while the chance of a 25-point cut in July was 78.6%, down from Tuesday. The two-year Treasury yield, a proxy for market sentiment about interest rate policy, was last 5.5 basis points lower at 1.852%. Yields on short-dated notes fell, while yields on longer maturities rose, steepening the yield curve and ending a multi-day flattening trend. Powell's remarks said the Fed stands ready to "act as appropriate" to sustain a decade-long economic expansion. He contrasted the "baseline outlook" of continued U.S. growth against a considerable set of risks including persistently weak inflation, slower growth in other major economies and a downturn in business investment driven by uncertainty over the Trump administration's trade war with China. At their June meeting, Fed officials signaled that those risks could warrant a cut in rates, which has led the market to fully price in a 25-basis-point rate cut by the end of the month despite strong payrolls data. "The market is focused on the part of Powell's testimony where he says 'uncertainties continue.' And that led the market to think that uncertainty alone, rather than the incoming data, is enough to get them to move, likely 25 basis points, at the end of this month," said Michael Pond, head of global inflation-linked research at Barclays in New York. The spread between two- and 10-year yields was last up to 20.2 basis points, its highest in a week. It hit a month low of 14.2 basis points on Tuesday as strong June jobs data released July 5 tempered rate cut expectations. "If the economy is deteriorating and the Fed is cutting, all they're doing is offsetting weaker growth. But if growth is fine and they're cutting, then that leads the market to think this is much more of an insurance cut, which could boost risk assets and that's in part why we’re seeing a bounce in breakeven inflation rates." Later on Wednesday, minutes from the June meeting of the Federal Open Markets Committee meeting will be released. Also on Wednesday, the Treasury Department will auction off $24 billion of new 10-year notes. July 10 Wednesday 10:25AM New York / 1425 GMT Price US T BONDS SEP/d 154-26/32 -9/32 10YR TNotes SE/d 127-92/256 2/32 Price Current Net Yield % Change (bps) Three-month bills 2.1825 2.2251 -0.029 Six-month bills 2.04 2.0956 -0.044 Two-year note 99-144/256 1.8521 -0.053 Three-year note 99-200/256 1.8252 -0.041 Five-year note 99-144/256 1.8425 -0.029 Seven-year note 99-150/256 1.9388 -0.013 10-year note 102-212/256 2.0561 0.000 30-year bond 106-160/256 2.5562 0.023 YIELD CURVE Last (bps) Net Change (bps) 10-year vs 2-year yield 20.20 4.80 30-year vs 5-year yield 71.30 5.35 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 2.25 0.25 spread U.S. 3-year dollar swap -1.25 -1.50 spread U.S. 5-year dollar swap -2.75 0.50 spread U.S. 10-year dollar swap -6.25 0.25 spread U.S. 30-year dollar swap -33.00 -0.75 spread (Reporting by Kate Duguid; Editing by David Gregorio)

TREASURIES-U.S. yields tick up, curve flattens as market awaits Fed

Jul 09 2019

(Adds auction details, analyst quote; updates throughout) By Kate Duguid NEW YORK, July 9 U.S. Treasury yields ticked up on Tuesday in muted trading ahead of the release of June's Federal Reserve meeting minutes on Wednesday. Yields at the short end of the curve moved more than at the long end, extending a multi-day trend as the market awaited the Federal Open Market Committee minutes, and Fed Chair Jerome Powell's congressional testimony on Wednesday. Both may provide insight into an expected interest rate cut this month. The two-year Treasury bond yield was last up 3.1 basis points at 1.911%, the highest since mid-June. The benchmark 10-year yield was last up 2.7 basis points to 2.061%. Stronger-than-expected employment growth in June tempered expectations that the Fed would cut interest rates by 50 basis points at its July meeting, but a 25 basis point cut remains fully priced in by the market. The probability of a 25-point cut was 96.2% on Tuesday, with a 3.8% chance of a 50-point cut. A week prior, those forecasts were 75% and 25% respectively. The "expectation that we would get a weaker-than-expected payrolls number (has) thrown traders off their game, at least for now," said Kevin Giddis, head of fixed income capital markets at Raymond James. "Today and the rest of this week we will give heavy weight to what the Fed says." The spread between two- and 10-year yields , the most common measure of the yield curve, fell in early trade to 14.2 basis points, its lowest since May 31. It was last at 14.9 basis points. Powell will deliver the Fed's semiannual monetary policy report to the House of Representatives Financial Services Committee on Wednesday, followed by testimony before the Senate Banking Committee on Thursday. Some analysts noted that the meeting minutes would be more likely to move markets than Powell's remarks. "We're watching the minutes that are coming out tomorrow. That's the big thing," said Wen Lu, interest rates strategist at TD Securities. "I don't think there's going to be anything significant that comes out of the testimony," said Lu. "It will be extremely straightforward. On Tuesday, the Treasury Department auctioned off $38 billion of new three-year notes to solid demand. Direct bidders took 17.92% of the offering, indirect bidders took 48.5% and primary dealers took 33.58%. The bid-to-cover ratio was 2.39, the lowest since March 2009. (Reporting by Kate Duguid; Editing by Bernadette Baum, Chizu Nomiyama and Richard Chang)

World News