U.S. Treasury yields for long-dated debt slid lower Tuesday morning ahead of the start of the Federal Reserve policy makers’ gathering today.

What yields are doing

The 10-year Treasury note yield
TMUBMUSD10Y,
1.248%

dropped 4 basis points to 1.235%, versus 1.276% on Monday at 3 p.m. Eastern Time.

The 30-year Treasury bond
TMUBMUSD30Y,
1.902%

was down 3.7 basis points at 1.888%, compared with 1.925%.

The 2-year note yield
TMUBMUSD02Y,
0.214%

rose 1.3 basis points to 0.211%, versus 0.198% 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.

Data released on Tuesday shows that durable-goods orders rose in June despite supply and labor shortages, and U.S. home prices set another record in May, according to the latest edition of the S&P CoreLogic Case-Shiller Home Price Index. The Conference Board consumer-confidence index for July is 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,
0.698%
.

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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