Treasuries End Flat in Lackluster Session

Traders are waiting to see whether the FOMC keeps interest rates unchanged -- a move that could challenge longer-dated issues

Treasuries closed Monday's lackluster session little changed as traders bided their time ahead of Wednesday's key events, in which the Fed's policy arm will decide whether to cut interest-rates again or leave them unchanged. The upcoming decision and the Treasury refunding announcement left most traders sidelined. There was a little downside pressure on bonds through the morning as Treasuries reversed Friday's short covering rally.

Gains in equities, a 5.7% jump in new home sales, and technicals added to the losses. But with nothing new on the day's agenda, and the actual pace of home sales close to expectations (thanks to downward revisions to prior month's data), technical support levels held and Treasuries rebounded.

The belly of the curve underperformed most of the day, still hurting from supply considerations. Rumors that the Treasury would go with a monthly five-year offering from the current quarterly issuance kept that sector of the curve heavy. There was additional pressure from spread product as the Asian Development bank prepped a $2 billion five-year notes.

News the Treasury would borrow $52 billion this quarter and pay down $89 billion in Q2 were widely expected and had no impact.

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