Treasuries Close Firmly Positive Ahead Of Fed Decision

(RTTNews) - After ending the previous session modestly lower, treasuries moved back to the upside over the course of the trading day on Tuesday.

Bond prices saw some volatility in morning trading but remained firmly positive in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.5 basis points to 2.071 percent.

With the drop on the day, the ten-year yield extended a recent downward trend, hitting its lowest closing level in over a year.

The continued strength among treasuries was partly due to recent concerns about the outlook for the global economy.

Bonds have been seen as a safe haven amid signs of slowing global growth as well as the recent sell-off by the price of crude oil.

Traders were also looking ahead to the Federal Reserve's highly anticipated monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but traders will be paying close attention to whether the central bank reiterates its intention to keep rates at low levels for a "considerable time."

Along with the statement, the Fed's updated economic forecasts could also impact the outlook for future rate hikes.

On the economic front, the Commerce Department released a report showing a drop in new residential construction in the month of November.

The report said housing starts fell 1.6 percent to a seasonally adjusted annual rate of 1.028 million in November from the revised October estimate of 1.045 million.

Economists had expected housing starts to climb to a rate of 1.038 million from the 1.009 million originally reported for the previous month.

Building permits, an indicator of future housing demand, tumbled 5.2 percent to an annual rate of 1.035 million in November from the revised October rate of 1.092 million.

While the Fed's policy decision is likely to be in the spotlight on Wednesday, traders will also be presented with the Labor Department's report on consumer price inflation.