Bonds

Treasury yields fall slightly as Fed begins 2-day meeting

Treasury yields dipped on Tuesday as the Federal Reserve began its two-day policy meeting.

The yield on the benchmark 10-year Treasury note fell one basis point to 0.59% and the yield on the 30-year Treasury bond traded 2 basis points lower at 1.22%. Yields have an inverse relationship to prices.

Treasurys

The Fed is set to announce its latest interest rate decision on Wednesday. The FOMC kept its key interest rate unchanged at near zero at its last meeting in June as it continued to deal with the impact of the coronavirus pandemic on the U.S. economy.

"Fed officials have indicated that rates will be held low for a long period of time. Forward guidance is its game plan for conducting policy amid low rates," Stephen Gallagher, Societe Generale chief U.S. economist, said in a note. "We expect more communication, but strong commitments may need to wait."

The central bank said Tuesday it is extending its lending programs to businesses, governments and individuals to the end of 2020. It was previously set to expire Sept. 30.

On the data front, the U.S. consumer confidence index fell to 92.6 in July, down from a revised 98.3 in June, according to the Conference Board. The decline came as cases of Covid-19 continued to climb across the country.

Meanwhile, the Treasury will auction $24 billion in two-year floating rate notes and $44 billion in seven-year notes.

— CNBC's Silvia Amaro contributed reporting.