Prices of U.S. Treasurys traded nearly flat on Tuesday ahead of a number of major events on Wednesday, including U.S. economic growth data, a Treasury refunding announcement and the conclusion of a two-day Fed meeting.
With so much key information coming later in the week, trading both on Monday and Tuesday has held to a tight range, with investors wary of taking on major positions.
"We are definitely in a wait-and-see mode this week," said Wilmer Stith, co-manager of the Wilmington Broad Market Bond Fund in Baltimore.
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Markets are especially keen for clarity on when the U.S. Federal Reserve could slow or even stop its $85 billion per month in buying of Treasurys and mortgage-backed securities, stimulus aimed at lowering unemployment.
Fed speakers, including Chairman Ben Bernanke, have hinted recently at a pullback, sending yields soaring from May. Wednesday's Fed statement at the end of the bank's policy meeting could hint at a slower buying pace to come, as well.
"We get the statement from the FOMC tomorrow and that will lay out—for at least 48 hours until we get the employment data on Friday—what the committee's ideas are with regard to tapering the Fed bond purchases," Stith added.
Since the timing and pace of cuts to bond buying depend on the health of the world's biggest economy, the market is focused on data releases such as the second-quarter gross domestic product report due at 8:30 a.m. on Wednesday and the July U.S. employment data, due at the same time on Friday.
The Treasury's quarterly refunding announcement on Wednesday has also attracted unusually intense interest.