Bonds on the rebound Treasurys recover after nine straight days of losses as investors look for safety ahead of two-day Fed meeting; dollar splits. NEW YORK (CNNMoney.com) -- Bonds snapped out of their nine-day losing streak Tuesday as investors fled equity markets despite promising reports on real estate and consumer confidence, just ahead of the Federal Reserve's two-day policy meeting. The dollar was mixed against the euro and the yen. The 10-year note gained 8/32 to 99-11/32, yielding 5.20 percent, down from 5.24 percent late Monday. The yield on the 10-year note remains below the yield of the two-year note. Yield curve inversions in the past have been interpreted as a possible sign of impending recession, but that is now considered less reliable since the curve has inverted on and off over the past 11 months. Many economists now say an inversion is more a harbinger of slowing economic growth. The 30-year bond gained 15/32 to 88-29/32, yielding 5.24 percent, down from 5.28 percent the previous session. Bond prices and yields move in opposite directions. The five-year note gained three ticks, yielding 5.19 percent, while the two-year note was unchanged, yielding 5.24 percent. Treasury prices took a break from their downward decline as investors bailed on stocks after the Dow industrials tumbled by more than 100 points during afternoon trade, while the tech-laden Nasdaq was 1.5 percent lower. The Treasury rebounds comes just before the central bank begins its two-day policy meeting, where it is expected to institute its 17th straight interest rate hike. Right now a 25-basis-point hike seems almost certain, although some have speculated that the Fed may institute a 50-basis-point hike to curb the threat of inflation. Reuters also reported that bonds received some additional support from a think tank study that suggested that there is no consensus among policymakers at the central bank about what steps it would take after this week's meeting, suggesting it could pause in its monetary tightening campaign. Investors largely overlooked key reports on May existing home sales which fell 1.2 percent to the slowest pace in four months as higher interest rates dampened buying activity, the National Association of Realtors said. Sales of existing U.S. homes fell to a seasonally adjusted annual rate of 6.67 million units in May from a revised 6.75 million in April, meeting forecasts of 6.6 million, according to economists surveyed by Briefing.com. The Conference Board's consumer confidence survey for June posted a modest increase to reach 105.7 from an upwardly revised May reading of 104.7, topping economists' expectations. In currency trading, the euro bought $1.2584, down from $1.2580 Monday. The dollar traded at ¥116.27, down slightly from ¥116.29 in the previous session. --from staff and wire reports _____________________ Related: Fed walks a fine line. |
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