By Ellie Ismailidou, MarketWatch
Investors look ahead to Fed statement
Treasury prices finished lower on Tuesday, snapping a five-day
winning streak and pushing yields higher, as global stock markets
rebounded
(http://www.marketwatch.com/story/us-stock-futures-climb-with-key-fed-meeting-in-focus-2015-07-28)
from Monday's rout and investors sold bonds in favor of riskier
assets.
The bond selloff started overnight as China's stock market
extended its decline from Monday, but managed to finish off session
lows (http://www.marketwatch.com/storyno-meta-for-guid). It
continued during the New York trading day, as investors prepared
for a statement from the Federal Reserve's rate-setting committee,
expected at 2 p.m. Eastern on Wednesday.
The Fed has maintained a data-dependent approach, monitoring
recent economic reports for signs of a consistent recovery in the
labor market and a move toward its 2% inflation target.
"While the labor market recovery is still on track, we are not
close enough to the inflation target," said Kirk Barneby, portfolio
manager of the Centre Active U.S. Treasury Fund at Centre
Funds.
Members of the Federal Open Market Committee are expected to
"reaffirm the need to raise rates at some point" but wouldn't "lock
themselves in a specific liftoff date," Barneby added.
The risk-on sentiment fueled by the stock market rebound was the
main force moving the Treasury market on Tuesday, analysts
noted.
The selling persisted even as the Case-Shiller home-price index
came in slightly weaker than expected,
(http://www.marketwatch.com/story/us-house-prices-rise-11-in-may-2015-07-28-991016)
a U.S. consumer confidence reading came in significantly below
expectations and Markit's purchasing managers index showed that
services sector growth strengthened only slightly in July.
The yield on the 10-year Treasury rose 2.3 basis point to
2.252%, according to Tradeweb. The yield on the two-year note
gained 1.6 basis point to 0.670% and the yield on the 30-year bond
added 2.5 basis points to 2.969%.
In Europe, government bonds were also under selling pressure on
Tuesday, as European stocks rallied,
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAGoVChMIwdmw8Pj9xgIVx4I-Ch1eLAX4&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Feuropean-stocks-stabilize-as-china-fears-persist-2015-07-28&ei=UYW3VYHtM8eF-gHe2JTADw&usg=AFQjCNHrIsJFb0sjJqESEBALP3cRP4Rg6A&sig2=Hg4wqf8u4y6ypx0am8QlwQ&bvm=bv.98717601,d.cWw)
bouncing back somewhat from the prior day's China-led selloff.
Market watchers were also following the Greek debt situation,
where the debt-burdened country and its creditors launched
discussions on a third bailout deal.
The yield on the benchmark German 10-year bund inched 0.3 basis
point higher to 0.650%.
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