By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices edged up Tuesday, bringing yields off their highest level since early December, as hopes about a debt deal for Greece faded and traders turned their attention to the U.S. outlook as the Federal Reserve begins its two-day meeting.
Yields on 10-year notes 10_YEAR +0.68% , which move inversely to prices, fell 2 basis points to 2.04%. A basis point is one one-hundredth of a percentage point.
Thirty-year-bond yields 30_YEAR +0.54% slipped 1 basis point to 3.12%.
Yields on 2-year notes 2_YEAR 0.00% were little changed at 0.24% before the government’s sale of the securities.
When the Federal Open Market Committee ends its policy meeting Wednesday, it will also release individual members’ forecasts for the central bank’s target interest rates, called the federal-funds rate. Also, Fed Chairman Ben Bernanke will be holding a news conference.
`Key risks for the week’
“The market is left to refine expectations for the historic unveiling of the Fed’s first published rate forecasts,” David Ader, head of government-bond strategy at CRT Capital Group, wrote in a note.
“While much has been said on the topic and the Fed has done their part to manage expectations, the statement, economic/rate projections and Bernanke’s press conference remain the key risks for the week and ones which are dovish – at least at first glance.”
In its recent statements, the Fed has said it would keep rates exceptionally low at least through mid-2013.
“We’re cautious that the widely anticipated pushing back of official rate-hike expectations from mid-2013 (at the earliest) to sometime in 2014 or beyond has already been priced into the market with 10-year yields dipping below 1.85% early last week,” Ader said.
Also, the Treasury Department will sell 2-year notes at 1 p.m. Eastern Time, the first of three note sales this week.
On Monday, 10-year yields closed at their highest level since in almost seven weeks as investors felt more confident that Greece would soon make a deal with its creditors to reduce its debt burden. Read about Treasury bonds on Monday.
Instead, euro-zone finance ministers rejected the offer by debt holders to write off much of their existing Greek holdings. Officials insisted debt holders accept a lower interest rate on new bonds to be issued as part of a restructuring. Read more on Greek debt talks.
