Treasuries Close Notably Lower Ahead Of Fed Announcement

(RTTNews) - After ending the previous session roughly flat, treasuries moved notably lower over the course of the trading day on Tuesday.

Bond prices moved modestly lower in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 4.9 basis points to 1.973 percent.

The weakness among treasuries came as traders looked ahead to the Federal Reserve's monetary policy announcement Wednesday afternoon.

While the Fed is widely expected to keep interest rates unchanged, traders will be paying close attention to any hints regarding the outlook for rates.

Several recent economic reports have shown signs of weakness, leading many analysts to predict the Fed will delay its first rate hike until later in the year.

Traders were also reacting to the results of the Treasury Department's auction of $35 billion worth of five-year notes.

The five-year note auction drew a high yield of 1.380 percent and a bid-to-cover ratio of 2.56, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.60.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Finishing off this week's series of long-term securities auctions, the Treasury is due to sell $29 billion worth of seven-year notes on Wednesday.

The Fed is likely to be in the spotlight on Wednesday, although traders will be presented with reports on first quarter GDP and pending home sales prior to the release of the statement from the central bank.