Treasuries Move Slightly Higher Ahead Of Fed Announcement

Treasuries showed a slight move to the upside during trading on Tuesday, largely offsetting the modest weakness seen in the previous session.

After seeing initial strength, bond prices pulled back off their highs but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.964 percent.

Treasuries have shown a lack of direction over the past few sessions as traders await the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is scheduled to announce its latest monetary policy decision at 2 pm ET on Wednesday following a two-day meeting of the Federal Open Market Committee.

At its June meeting, the Fed raised interest rates by 25 basis points to a range of 1.75 percent to 2 percent and forecast two additional rate hikes this year.

While the Fed is widely expected to leave rates unchanged on Wednesday, the accompanying statement is likely to be closely examined for any hints about future rate hikes.

On the U.S. economic front, the Commerce Department released a report showing personal income and spending both increased in line with economist estimates in the month of June.

The report said personal income climbed by 0.4 percent in June, matching the increase seen in May as well as expectations.

The Commerce Department said personal spending also rose by 0.4 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected spending to increase by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

A separate report from the Conference Board showed a modest rebound in consumer confidence in the month of July.

The Conference Board said its consumer confidence index inched up to 127.4 in July from an upwardly revised 127.1 in June. Economists had expected the index to rise to 127.0 from the 126.4 originally reported for the previous month.

Traders are likely to be focused on the Fed announcement on Wednesday, although reports on private sector employment and manufacturing activity may still attract some attention earlier in the day.

The Treasury Department is also due to announce the details of next week’s auctions of three-year and ten-year notes and thirty-year bonds.

by RTTNews Staff Writer

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