U.S. Treasury yields for long-dated debt slipped lower Tuesday morning ahead of the start of the Federal Reserve policy makers’ gathering that kicks off later in the session.

What yields are doing

The 10-year Treasury note yield
TMUBMUSD10Y,
1.249%

was at 1.262%, versus 1.276% on Monday at 3 p.m. Eastern Time.

The 30-year Treasury bond
TMUBMUSD30Y,
1.902%

was yielding 1.914%, compared with 1.925%.

The 2-year note yield
TMUBMUSD02Y,
0.203%

was 0.203%, versus 0.1 94% a day ago.

Fixed-income drivers

A slump in trading in Asian markets overnight was fueling some Treasury buying, nudging long-term yields lower.

READ: How China’s stock-market meltdown puts U.S. investors at risk

However, the focus remains on the outcome of the meeting of the rate-setting Federal Open Market Committee that concludes at 2 p.m. Eastern on Wednesday, which will likely test Treasury yields which have been hanging around four month month lows amid questions about inflation and the growth outlook for the U.S. in the aftermath of the COVID-19 crisis.

The economics calendar for Tuesday at 8:30 a.m. Eastern Time includes durable-goods orders data for June, the latest Case-Shiller home price index due at 9 a.m., and consumer-confidence index for July due at 10 a.m., along with a report on manufacturing activity in Fed’s Richmond region.

Investors are also watching for a $61 billion in five-year Treasury notes
TMUBMUSD05Y,
0.695%
.

What strategists are saying

“US rates declined overnight with weaker global equities as the primary driver while investors await tomorrow’s FOMC statement and Powell’s press conference,” wrote BMO Capital Markets strategists Ian Lyngen and Ben Jeffery.

“The process of recalibrating estimates for the path out of the pandemic remains the unifying theme across financial markets at the moment,” the fixed-income strategists wrote.

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