Treasuries Close Nearly Unchanged Ahead Of Fed Announcement
After moving notably higher over the course of the two previous sessions, treasuries showed a lack of direction during trading on Tuesday.
Bond prices spent the day bouncing back and forth across the unchanged line before closing nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day unchanged at 1.040 percent.
The choppy trading on the day came as traders looked ahead to the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but many expect the central bank to provide additional guidance about its bond purchasing program.
Uncertainty about more fiscal stimulus under President Joe Biden also kept traders on the sidelines amid recent reports pointing to intensifying opposition from GOP lawmakers.
The Biden administration has signaled a willingness to negotiate over the president’s $1.9 trillion proposal, but it is worth noting that talks over the previous relief package dragged on for months.
Meanwhile, traders largely shrugged off a report from the Conference Board showing an unexpected improvement in U.S. consumer sentiment in the month of January.
The Conference Board said its consumer confidence index climbed to 89.3 in January from a downwardly revised 87.1 in December.
The increase surprised economists, who had expected the index to edge down to 88.5 from the 88.6 originally reported for the previous month.
Traders also did not pay much attention to the results of the Treasury Department’s auction of $61 billion worth of five-year notes, which attracted below average demand.
The five-year note auction drew a high yield of 0.424 percent and a bid-to-cover ratio of 2.34, while the ten previous five-year note auctions had an average bid-to-cover ratio of 2.48.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The Fed announcement is likely to be in the spotlight on Wednesday, overshadowing a report on durable goods orders in the month of December.
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