Treasurys decline ahead of Fed, auction details

NEW YORK — Treasury prices continued to drop Tuesday as stocks moved off their lows for the day. Trading was cautious ahead of announcements from the Federal Reserve on interest rates and details on the next round of auctions.

In afternoon trading, the 10-year Treasury, often used as a benchmark for consumer borrowing, fell 17/32 to 101 5/32, pushing its yield up to 3.48 percent from 3.42 percent.

Kim Rupert, managing director of global fixed income analysis at Action Economics, said Treasury prices slipped as investors started to buy into the stock market, though major stock indexes are still lower on the day.

“Buying (of Treasurys) petered out as stocks came off their lows,” Rupert said.

Rupert said long-term bonds were hit the hardest ahead of announcements for the next round of auctions. The Treasury Department will disclose on Wednesday the amount of three- and 10-year notes and 30-year bonds it is auctioning next week.

Treasurys were also under pressure because of uncertainty about what the Federal Reserve will say about the economy on Wednesday as it wraps up its interest-rate decision meeting. Analysts widely expect the Fed will keep key interest rates at historical lows, but any details it provides about when it might start raising rates again could affect Treasury prices.

In other trading, the 30-year bond fell 1 12/32 to 102 20/32. Its yield rose to 4.34 percent from 4.26 percent.

The three-year note fell 1/32 to 99 25/32, while its yield rose to 1.45 percent from 1.43 percent.

The yield on the three-month T-bill rose to 0.06 percent from 0.05 percent.

The cost of borrowing between banks fell fractionally. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — dropped to 0.27813 percent from 0.27938 percent.