Treasuries Extend Uptrend Ahead Of Fed Announcement

(RTTNews) - Treasuries moved notably higher over the course of the trading day on Tuesday, extending the upward trend seen over the past several sessions.

Bond prices moved to the upside in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.058 percent.

With the decrease on the day, the ten-year yield ended the session lower for the sixth time in the past seven trading days.

The early strength among treasuries may have partly been in reaction to a report from the Commerce Department showing a substantial decrease in housing starts in the month of February.

The report said housing starts plummeted by 17.0 percent to an annual rate of 897,000 in February from the revised January estimate of 1.081 million. Economists had been expecting housing starts to dip to 1.048 million.

With the much bigger than expected decrease, housing starts fell to their lowest annual rate since January of last year.

On the other hand, the report said building permits climbed 3.0 percent to an annual rate of 1.092 million in February from the revised January rate of 1.060 million.

Building permits, an indicator of future housing demand, had been expected to inch up to 1.058 million from the 1.053 million originally reported for January.

Bond traders were also looking ahead to the announcement of the Federal Reserve's latest monetary policy decision on Wednesday.

The Fed is not expected to announce an increase in interest rates, but traders will be paying close attention to any changes to the accompanying statement.

In light of recent upbeat employment data, many analysts expect the Fed to remove the word "patient" regarding when it plans to begin normalizing monetary policy.

The central bank is likely to be in the spotlight on Wednesday, with the statement due to be followed up by a press conference by Fed Chair Janet Yellen.