Bonds Mixed

Treasuries were mixed prior to a $24 billion auction of 2-year notes and in anticipation of the Fed's expected rate raise

Treasuries were mixed prior to Wednesday's auction of $24 billion of 2-year notes. Short-dated treasuries had already begun to underperform overnight, following news that central banks had lessened dollar holdings in favor of the euro, according to Informa. There were fears that the banks would be less likely to buy dollars and re-invest them in short Treasuries. However, long-dated treasuries were slightly higher. Some say the market was given a boost by a report that al-Qaeda car bomber al-Kurdi was captured in Iraq, but terrorists acts continue prior to Sunday's election. The market is anticipating the Fed will raise rates 25 basis points at next week's FOMC meeting and see Feb. 4 Nonfarm Payroll report as critical.

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