US bonds trade light before interest rate announcement
Trade in U.S. Treasury bonds was light early Tuesday ahead of a decision by the U.S. Federal Open Market Committee on whether or not to raise interest rates, although better than expected news about factory orders spurred some selling.
Yields on 10-year Treasury bonds were steady at 4.198 percent at mid-afternoon in New York, while yields on 2-year bonds stood at 3.637 percent.
It was expected that short-term interest rates would be raised 0.25 percent to 3 percent.
Anticipation of the Fed’s decision also kept activity light in eurozone and UK government bond markets, as did news of rising unemployment in the eurozone and particularly in Germany.
The news on unemployment was seen as a reason for the European Central Bank to hold the line on its current 2 percent interest rate.
Yields on the 10-year Bund fell to 3.373 percent before rising to 3.376 percent, down 2.2 basis points for the day. The 2-year Schatz was down 2.2 basis points as well, to 2.213 percent.
In the UK, growth concerns were prevalent on news of the worst retail sales volume in ten years and on information that the manufacturing sector contracted for the first time in 2 years. Prices of gilts rose and yields on 10-year bonds fell by 2.9 basis
points to 4.508 percent.