Treasuries Close Roughly Flat Ahead Of Monetary Policy Decisions

(RTTNews) - Treasuries saw modest strength for much of the trading session on Tuesday but pulled back near the unchanged line going into the close.

Bond prices finished the day nearly flat for the third consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.688 percent.

The pullback seen late in the session came as traders looked ahead to monetary policy decisions by both the Bank of Japan and the U.S. Federal Reserve.

The Bank of Japan is expected to announce its latest policy decision overnight, with some analysts suggesting that the bank could cut interest rates further into negative territory.

Meanwhile, the Fed is scheduled to release its statement Wednesday afternoon and is widely expected to leave interest rates unchanged.

Traders are likely to keep a close eye on the wording of the Fed's statement for clues on the possibility of a rate hike later this year.

The strength seen earlier in the day came following the release of disappointing housing data, which reinforced expectations that the Fed will refrain from raising rates.

The Commerce Department said housing starts tumbled by 5.8 percent to an annual rate of 1.142 million in August from the revised July estimate of 1.212 million.

Economists had expected housing starts to drop by 1.7 percent to a rate of 1.190 million from the 1.211 million that had been reported for the previous month.

The report also said building permits, an indicator of future housing demand, dipped by 0.4 percent to a rate of 1.139 million in August from a revised 1.144 million in July.

The decrease surprised economists, who had expected building permits to climb by 1.3 percent to a rate of 1.167 million in August from the 1.152 million originally reported for the previous month.

Early trading on Wednesday may be impacted by reaction to the Bank of Japan's decision, although the Fed is likely to quickly move into the spotlight.