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US Treasury yield curve flattens as Fed, Bank of Japan meet

Longer-dated U.S. Treasury bonds gained on Tuesday, while shorter-dated notes fell.

Prices for 10- and 30-year bonds rose, with the benchmark 10-year note yielding 1.6858 percent, having closed at 1.698 percent in the previous session. Bond yields move inversely to prices.

notes traded higher, while two-year notes fell.

Treasury yields

Bonds Front: U.S. Treasurys Chart

The U.S. Federal Reserve will start its two-day meeting on Tuesday and make a policy announcement on Wednesday. Market consensus is for the Fed to hold its base rate in the 0.25-0.50 percent range and not lift again until December.

The Bank of Japan will also meet on Tuesday and make an announcement on Wednesday. There is speculation the Japanese central bank could cut interest rates further into negative territory.

Japanese 10-year sovereign bonds rose on Tuesday.

On Tuesday, attention will be on U.S. housing starts and building permits data for August — which showed a drop — as well as oil prices. Light crude futures for October settled at $43.44 per barrel, up 14 cents or 0.32 percent.

BNP Paribas reiterated its preference for U.S. Treasury bonds over euro zone government bonds in its multi-asset portfolio in a report on Tuesday.

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