US Treasury yields higher ahead of Fed

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U.S. sovereign bond prices were lower on Tuesday, pushing yields higher ahead of the start the much anticipated Federal Reserve meeting.

Investors are waiting for a possible interest rate rise on Wednesday, after the Federal Open Market Committee concludes its two-day meeting.

US 10-YR
US 30-YR

U.S. 10-year Treasury yields climbed to trade around 2.2658 percent on Tuesday, after closing at 2.225 percent.

Longer dated 30-year bond yields also ticked higher to 2.9953 percent after finishing at 2.962 on Monday.

The Fed is widely expected to raise the fed funds rate by a quarter point Wednesday for the first time since June 2006, while emphasizing that it will be slow to hike rates further.

The Fed begins its meeting Tuesday, and will release its post-meeting statement Wednesday at 2 p.m. ET.

Trading in U.S. Treasurys has been choppy in the run-up to the meeting, with yields climbing around 10 basis on Monday, before ending the session more or less flat on the day.

"Fed funds rate was set at 0 percent - 0.25 percent at the same meeting in 2008 – an unprecedented 7 years of unchanged, emergency rates and almost 10 years since a rate hike. The market has priced an 80 percent likelihood of Fed funds moving- probably the most talked about event that hasn't happened over the past three odd years. Indeed, so totemic is this move that investors run the risk of forgetting all the other things that really drive the economy," fixed income specialist at Kames Capital, Adrian Hull said.

Oil prices remain in focus, after U.S. crude settled up 69 cents on Monday, or 1.94 percent, at $36.31 a barrel, pausing a six-day losing streak that took crude to its lowest in nearly seven years.

Internationally traded Brent were up about 2.9 percent on Tuesday, or $1.10, at $39.02 a barrel. U.S. crude gained 3.4 percent, to $37.53 a barrel.

On the data front, U.S. CPI for November was unchanged, in line with expectations. The Empire State manufacturing index fell for a fifth straight month.