U.S. Treasury prices slipped on Tuesday with benchmark yields edging up from five-week lows on concerns about the Federal Reserve further paring its bond-purchase monetary stimulus at its policy meeting next week.
Some traders attributed those worries stemming from an article in The Wall Street Journal that said the U.S. central bank will likely reduce its monthly purchases of Treasuries and mortgage-backed securities by $10 billion to $65 billion.
"The view out there is there's going to be continued tapering on a gradual basis. Another $10 billion in tapering is a logical way to go," said Mike Cullinane, head of Treasuries trading with D.A. Davidson in St. Petersburg, Florida.
Such a move followed the somewhat surprising decision from the Fed to begin shrinking its third round of quantitative easing (QE3) at its December policy meeting by reducing its bond purchases in January by $10 billion from $85 billion.
Fed officials will hold their next monetary policy meeting on Jan. 28-29.
"The Federal Reserve is on track to trim its bond-buying program for the second time in six weeks as a lackluster December jobs report failed to diminish the central bank's expectations for solid U.S. economic growth this year," The Wall Street Journal story published late Monday said, citing interviews with officials and their public comments.