TREASURIES-Yields rise as traders eye Fed announcement
REUTERS 10:23 AM ET 10/29/14
* Volumes light ahead of Fed policy statement
* Approaching Treasury auctions dull dealings
* Equities boosted by optimism over Fed
By Michael Connor
NEW YORK, Oct 29 (Reuters) - U.S. Treasuries yields rose on Wednesday as wary traders nudged down prices ahead of a Federal Reserve policy statement that investors hope will signal low U.S. interest rates for the foreseeable future.
Volumes in U.S. debt were light, with the benchmark 10-year Treasury note down 6/32 in price and yielding 2.305 percent in early New York dealings.
"Everyone's being a little bit cautious," said Natan Magid, strategist at BMO Capital Markets in New York. "We are not seeing much in the way of volumes or any kind of price action."
In addition to potentially market-moving comments from the policy-making Federal Open Market Committee due on Wednesday, traders were also treading lightly because of the approaching end of October and auctions this week of new Treasury debt.
"We have a lot of supply coming up and people are cautious about taking too much risk on their balance sheets," Magid said.
The yield on the 30-year bond last stood at 3.0846 percent on a price decline of 16/32. It had yielded as much as 3.086 percent in earlier trading.
"Activity so far is off 40 percent from normal, roughly the pattern established in total volumes on Monday and Tuesday," FTN Financial strategist Jim Vogel said. "In these light flows, the dominant pre-FOMC theme appears to be defensive ..."
Later on Wednesday, the FOMC is widely expected to announce it will end its two-year-old stimulus program known as QE3 for the third round of quantitative easing. The Fed started buying bonds as far back as late 2008 to battle the recession.
"We don't really expect any kind of change to the language, with maybe a little bit of increase in uncertainty (because of) the dollar's strength," Magid said. "We don't expect that to take them off course but they might be a little conservative about changing their language."
The MSCI world equity index was up 0.50 percent on Wednesday. U.S. stock prices also rose. Wall Street price were also generally up in early trading. (Reporting by Michael Connor in New York; Editing by James Dalgleish)
(c) Copyright Thomson Reuters 2014. Click For Restrictions - about.reuters.com/fulllegal.asp
"My goal in life is to be as good of a person as my dog already thinks I am."
—Author Unknown
