Treasuries See Modestly Lower Close Ahead Of Fed Announcement

(RTTNews) - Mirroring the performance seen in the previous session, treasuries recovered from an early move to the downside but still closed modestly lower on Tuesday.

Bond prices climbed well off their worst levels but were once again unable to break into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 1.8 basis points to 2.695 percent.

The early weakness among treasuries came as traders looked ahead to the Federal Reserve's announcement of its latest monetary policy decision on Wednesday.

The Fed is widely expected to announce another $10 billion reduction in the pace of its asset purchases, which would drop to $45 billion per month.

Traders are also likely to keep a close eye on the language in the Fed's statement, looking for any indications regarding the outlook for interest rates.

The recovery attempt by treasuries partly reflected the release of a report from the Conference Board showing a modest deterioration in U.S. consumer confidence in the month of April.

The Conference Board said its consumer confidence index dipped to 82.3 in April from an upwardly revised 83.9 in March. Economists had expected the index to climb to 83.0 from the 82.3 originally reported for the previous month.

While the consumer confidence index decreased compared to the previous month's upwardly revised reading, it is still at its second best level since January of 2008.

Trading activity on Wednesday may be somewhat subdued in the lead up to the Fed's monetary policy announcement at approximately 2 pm ET.

The announcement from the Fed may overshadow the release of reports on private sector employment and first quarter GDP.