Treasuries Close Modestly Lower After Seeing Early Strength

(RTTNews) - After seeing early strength, treasuries turned lower over the course of the trading day on Tuesday amid lingering uncertainty about the Federal Reserve.

Bond prices pulled back well off their highs and dipped into negative territory to end the day modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.603 percent after hitting a low of 2.572 percent.

The downturn by treasuries came as traders expressed continued uncertainty about the outcome of the Fed's two-day monetary policy meeting.

While the Fed is not expected to announce an immediate change in monetary policy when it releases its statement Wednesday afternoon, traders will be looking for any signals regarding the September meeting.

A recent Bloomberg News survey showed that a growing number of economists expect the Fed to trim its monthly bond buying to $65 billion in September from the current pace of $85 billion.

Meanwhile, traders largely shrugged off a mixed batch of economic data, including reports showing continued home price growth and a bigger than expected drop in consumer confidence.

Standard & Poor's released a report early in the day showing continued growth in home prices in major U.S. metropolitan areas in the month of May.

The report showed the strongest annual rate of growth by the S&P/Case-Shiller 20-City Composite Home Price Index since March of 2006.

Separately, the Conference Board said its consumer confidence index dropped to 80.3 in July from a revised 82.1 in June. Economists had been expecting the index to dip to 81.0 from the 81.4 originally reported for the previous month.

The bigger than expected decrease by the consumer confidence index came after it reached a more than five-year high in June.

While the Fed statement is likely to be in the spotlight on Wednesday, reports on second quarter GDP, private sector employment, and Chicago-area business activity may attract some attention in the hours leading up to the announcement from the central bank.