Treasurys Pare Gains Following Fed Decision

U.S. Treasury debt prices pared gains Wednesday after the Federal Reserve cut the target rate for lending between banks by 50 basis points to 1.00 percent.

The benchmark 10-year Treasury note was trading 8/32 higher in price for a yield of 3.82 percent from 3.85 percent late Tuesday, while the 2-year Treasury note was 4/32 lower in price for a yield of 1.56 percent from 1.59 percent.

Also on the radar was a plunge in the U.S. dollar on Wednesday on a modest easing of risk aversion, with the dollar index at one point making its biggest daily drop since 1985, after charting spectacular gains in recent weeks.

Traders were also watching closely crude oil's rebound above $66 per barrel as a catalyst for stocks and for the currency.

Government securities yields, which move inversely to their prices, tend to fall when the central bank cuts rates, with the yields of short maturities usually losing the most.

Earlier, U.S. Treasury debt prices pared gains fleetingly after a stronger-than-expected durable goods orders report hinted economic weakness might not be as severe as some analysts have anticipated.

If U.S. stocks were to build on Tuesday's leap of more than 10 percent on some indexes, any longer term shifts into equities could come at Treasurys' expense, analysts said.

Murphy said some investors were said to be making a hefty portfolio reallocation into stocks and out of government bonds as October -- one of the worst months ever for U.S. stocks -- draws to a close.

The 30-year Treasury bond rose 10/32 in price for a yield of 4.18 percent, versus 4.20 percent late Tuesday.

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