Treasuries Move Higher Ahead Of Fed Announcement

(RTTNews) - Treasuries moved to the upside during the trading day on Tuesday, rebounding from the pullback seen in the previous session.

Bond prices moved higher in morning trading and remained firmly positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 2.509 percent.

The rebound by treasuries came as traders looked ahead to the announcement of the Federal Reserve's latest monetary policy decision on Wednesday.

The Fed is widely expected to leave interest rates unchanged, although traders are likely to keep a close eye on the accompanying statement and Fed Chairman Jerome Powell's subsequent press conference.

A day ahead of the Fed announcement, President Donald Trump urged the central bank to slash interest rates by as much as a full percentage point.

"Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening," Trump said in a post on Twitter.

He added, "We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing."

Some analysts accused the Fed of capitulating to Trump's demands by revealing after its last meeting that officials no longer expect to raise rates this year.

Meanwhile, bond traders largely shrugged off some upbeat economic data, with reports showing bigger than expected rebounds in consumer confidence and pending home sales.

The Conference Board said its consumer confidence jumped to 129.2 in April after falling to 124.2 in March. Economists had expected the index to rise to 127.0.

"Consumer Confidence partially rebounded in April, following March's decline, but still remains below levels seen last Fall," said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

A separate report from the National Association of Realtors showed its pending home sales index surged up by 3.8 percent to 105.8 in March after slumping by 1 percent to 101.9 in February. Economists had expected pending home sales to jump by 1.1 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Ahead of the Fed announcement Wednesday afternoon, trading may be impacted by reaction to reports on private sector employment, manufacturing activity, and construction spending.