US Treasuries were mostly little changed on Wednesday as Wall Street stocks bounced back from a sell-off and bond investors awaited the outcome of a Federal Reserve policy meeting. Trading was thin and choppy, with demand for long-dated bonds continuing to be fed by relatively fat US yields and moderating expectations of inflation, analysts and traders said.
Thirty-year bonds were last up 14/32 in price to yield 2.38 percent. Yields on the long bond have repeatedly set fresh lows this week and on Tuesday dipped to a record low of 2.328 percent, according to Thomson Reuters data. Yields on the 30-year issue favoured by many non-US investors touched a low on Wednesday of 2.364 percent in overseas trading before the New York open.
"Some of the bullish price action was reversed," said Ian Lyngen, senior government bond strategist at CRT in Stamford, Connecticut. "To some extent it was better corporate earnings, a risk asset rebound." US stocks got a lift from record-setting quarterly earnings from device-maker Apple on Wednesday and were last up about 0.4 percent after losing 1 percent on Tuesday, when investor confidence was rattled by disappointing profit reports.
Prices on benchmark 10-year Treasury notes were also up, with the yield at 1.7939 percent on a price rise of 10/32, according to Thomson Reuters data. Shorter maturities were little changed. "You are seeing a little bit of a bid in the long end but it is just on the theme of the flattening trade on low inflation (expectations) and the relative value of the US against other bonds around the world," said Justin Lederer, analyst at Cantor Fitzgerald in New York. "People are waiting on the Fed."
The Fed's first two-day policy meeting of 2015 concludes on Wednesday. Policymakers will likely restate their "patient" approach to raising rates, while also voicing faith that the economy will continue improving. "People will be looking at the patient language. I can't imagine it will be changed," Lyngen said. The yield curve between five-year notes and 30-year bonds narrowed slightly and last stood at 108 basis points, compared to a three-month average of 156.1, according to Thomson Reuters data.