Treasurys edge lower ahead of Fed meeting

NEW YORK (CNNMoney.com) -- Treasurys drifted lower Monday as investors prepared for the government's $74 billion quarterly refunding and a highly-anticipated statement from the Federal Reserve later this week.

What prices are doing: The benchmark 10-year note slipped 4/32 to 105-21/32, and its yield rose to 2.84% from 2.82% late Friday.

The 30-year bond fell 15/32 to 106-4/32 and its yield rose to 4.02%. The 2-year note shed less than 1/32 to 100-5/32 with a yield of 0.55%, and the 5-year lost 4/32 to 101-1/32 with a 1.54% yield.

What's moving the market: Treasury prices edged lower as investors geared up for $74 billion in new supply as part of the government's quarterly refunding.

Treasury plans to bring $34 billion worth of 3-year notes to market on Tuesday; $24 billion in 10-year notes next Wednesday; and $16 billion in 30-year bonds on Thursday. The auctions will settle on Aug. 16.

Traders also remained cautious ahead of the Federal Reserve's rate-setting committee meeting on Tuesday.

While the central bank is widely expected to maintain its long-held policy of near zero interest rates, there is speculation the Fed may renew its bond buying program, providing additional support to the economy.

What analysts are saying: "We're in a wait-and-see mode ahead of the Fed meeting," said Kim Rupert, fixed income analyst at Action Economics. "This is one of the more uncertain moments we have seen in over a year ahead because there's a strong debate on both sides of whether the Fed will revive its quantitative easing plan at this point in the recovery."

Last Friday, a government report showed that the economy shed 131,000 jobs in July, the second straight month of losses and much deeper than economists were expecting.

"The employment report wasn't great, but it also wasn't indicative of the economy falling of a cliff as the market perceived it to be," Rupert said. "The data was consistent with the downgraded outlook we've seen in the FOMC minutes, but it still seems that the market wants to see some stimulus from the Fed."

If the Fed does suggest additional supportive measures Tuesday, Rupert said Treasurys will likely rally on the news but the upside will be limited.

Rather, Treasurys will move higher in the long-term on ongoing uncertainty and concerns over the recovery.