Treasuries Finish Choppy Trading Day Slightly Higher

(RTTNews) - Following the rebound seen in the previous session, treasuries showed a lack of direction over the course of the trading day on Tuesday.

Bond prices spent the day bouncing back and forth across the unchanged line before eventually closing slightly higher. The yield on the benchmark ten-year note, which moves opposite of its price, edge down by less than a basis point to 4.026 percent.

The choppy trading on the day came as traders seemed reluctant to make significant moves as the Federal Reserve began its two-day monetary policy meeting.

While the Fed is widely expected to lower interest rates by 25 basis points, traders will look to the accompanying statement as well as officials' latest economic projections for clues about the outlook for rates.

CME Group's FedWatch Tool is currently indicating a 96 percent chance the Fed will cut rates by a quarter point and a slim 4 percent chance of a half-point rate cut.

The Fed is widely expected to lower rates by another 25 basis points at both its October and December meetings, although Fed Chair Jerome Powell is likely to say future rate cuts will depend on incoming economic data.

Meanwhile, traders largely shrugged off a Commerce Department report showing retail sales rose by much more than expected in the month of August.

The Commerce Department said retail sales climbed by 0.6 percent in August, matching an upwardly revised increase in July.

Economists had expected retail sales to inch up by 0.2 percent compared to the 0.5 percent growth originally reported for the previous month.

Early trading on Wednesday may be somewhat subdued in the lead up to the Fed's monetary policy announcement later in the afternoon.