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US stock-index futures wobbled, the dollar rose and benchmark 10-year Treasury yields moved up, with less than an hour to go before President Donald Trump’s eagerly anticipated speech to congress.

S&P 500 e-mini futures expiring in March had risen 0.3 per cent to 2371, after the S&P 500 index had closed Tuesday’s trading session 0.3 per cent lower. Tuesday also marked the end of the Dow Jones Industrial Average’s 12-day run of gains. The dollar index had risen 0.4 per cent in the New York evening to 101.5.

The benchmark 10-year Treasury note saw its yield rise a further 2.7 basis points to 2.42 per cent in evening trading, having moved higher earlier in the day off the back of more hawkish comments from Fed officials.

This is what analysts at BMO Capital markets are looking for ahead of the speech:

“We’re still hoping that the Trump speech on Tuesday night gives rates markets a good rationale to sell off, but are concerned about what the agenda items could hold. A series of talking points the White House circulated on Monday had what seem to be the broadest outlines of the speech, but details were again sparse. The first points in the outline for the agenda were tax and regulatory reform and, as we stated before, these are likely to be risk positive and treasury negative if they attract a lot of emphasis in the speech.

“Notably missing from the outline was any mention of infrastructure and if that’s also not in the speech, it’s likely to be a mild disappointment for risk assets. For curve, we still see flatteners as the next likely step if there is a disappointment from Trump especially when the Fed speakers ahead are likely to be hawkish. An effective or forceful reaffirmation of fiscal stimulus, as well as any near-term timeline for such steps is likely to be more beneficial for risk markets and more negative for Treasuries.

“The biggest risk-bearish possibilities from the speech remain the lack of an agenda for Congress or a failure to establish a set of priorities that might be accomplished in the first year when the administration is still in its honeymoon period. In that vein, it’s likely that the market will sharply discount much of what is said and focus on the top few priorities from the administration which are most likely to pass. Once the heavy legislative lifting of those key priorities is done, it’s difficult to imagine that the start of an election year in 2018 won’t shift the focus on Congress away from legislation and towards campaigning. Should administration priorities not be focused on fiscal stimulus, it’s likely we’ll see treasuries rally on the result.”

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