US Treasury Markets
11/3/2009 3:53 PM ET
(RTTNews) -
Treasuries saw a notable pullback on Tuesday, as traders bet that the Fed will keep interest rates at record lows, with the official announcement set to take place tomorrow.
The benchmark ten-year note opened higher but steadily weakened over the course of the session, closing near its worst levels of the day. Subsequently, the yield on the note, which moves opposite of its price, closed at 3.473 percent, posting a gain of 5.1 basis points.
Treasuries have largely remained in a range in recent sessions as traders continue to grapple with the proximity and magnitude of the economic recovery.
The Federal Open Market Committee began its two-day rate setting meeting today and is scheduled to make an announcement regarding the near-term direction of monetary policy at 2:15 p.m. ET on Wednesday. The weakness in bonds came as traders speculated that the Fed will keep its key rate unchanged amid the muddied economic outlook.
After its two-day meeting in September, the Federal Open Market Committee announced that it would maintain the target rate for the federal funds rate at 0 to 0.25%, saying it continued to believe that economic conditions warrant exceptionally low levels of the federal funds rate for an extended period.
The day's economic news also weakened bonds, with the Commerce Department reporting that orders for manufactured goods increased by a little more than expected in the month of September, amid a notable increase in shipments.
Factory orders increased by 0.9 percent in September following an unrevised 0.8 percent decrease in August. The increase in orders came in slightly above economist estimates for an increase of about 0.8 percent.
Looking ahead to Wednesday, bond traders are likely focus on the Fed's interest rate announcement, along with ADP employment data and treasury refunding and auction announcements.
by RTT Staff Writer
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