6/17, 1:32 PM (Source: TeleTrader)
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Treasuries fall as markets brace for Fed update

Prices of United States government securities dropped on Monday but there wasn't any significant sign of risk appetite amid continued concern for the world's economy. In spite of tension over the apparent attack on two tankers in the Gulf of Oman, oil also sold off but so did precious metals, a conventional safe haven, and even the Japanese yen slipped.

Stocks posted meager gains. Treasuries fell, which means yields jumped, as traders decided sovereign debt was overbought amid bets on strong interest rate cuts ahead by the Federal Reserve. Markets were still pricing in two to three decreases of 0.25 percentage points each by the end of the year before the monetary policy decision due on June 19, for which there was a perceived chance of less than one fifth for policy easing.

The two-year US yield jumped 3.6 basis points to 1.879 at 7:28 am ET. The ten-year note rate was up 2.8 points at 2.107% compared to the rise of 2.2 points to 2.609% for the 30-year bonds. Equivalent futures declined 0.06%, 0.21% and 0.32%, respectively.

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