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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