Treasuries Close Slightly Lower Ahead Of Fed Announcement
After ending the previous session nearly unchanged, treasuries turned in another lackluster performance during trading on Tuesday.
Bond prices saw modest weakness throughout the day but finish the session only slightly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 0.679 percent.
Traders seemed reluctant to make any significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but traders are likely to pay close attention to any tweaks to the accompanying statement. The central bank’s latest economic projections may also attract attention.
Meanwhile, traders largely shrugged off a report from the Fed showing growth in U.S. industrial production slowed by much more than expected in the month of August.
The Fed said industrial production climbed by 0.4 percent in August after soaring by an upwardly revised 3.5 percent in July.
Economists had expected production to jump by 1.0 percent compared to the 3.0 percent spike originally reported for the previous month.
Production increased for the fourth consecutive month but remains 7.3 percent below its pre-pandemic February level.
“We are vigilant that future progress toward a full recovery in the industrial sector will be slow and uneven as a health solution remains out of reach and fiscal relief fades,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.
“While the travails are comparatively less severe than in certain services sectors, industrial production risks remain heavily tilted to the downside,” he added.
A separate report from the Labor Department showed another notable increase in U.S. import prices in the month of August, with prices jumping by more than expected.
The Fed decision is likely to be in the spotlight on Wednesday, although reports on retail sales, business inventories and homebuilder may attract some attention ahead of the central bank’s announcement.