Tuesday November 17, 12:05 pm Eastern Time
(Note: this article is ''in progress''; there will likely be an update soon.)
U.S. Treasuries well bid at midday, eyes on FOMC
NEW YORK, Nov 17 (Reuters) - U.S. Treasuries held solid gains at midday as investors grew more confident the Federal Reserve would trim short-term rates at Tuesday's policy meeting, traders and analysts said.
At noon EST/1700 GMT, the bellwether 30-year bond stood 13/32 higher at 99-26/32 to yield 5.26 percent. Two-year notes improved 4/32 to 99-2/32, yielding 4.51 percent.
The gains, which came amid thin volume, largely represented short-covering by participants who earlier had been skeptical of the chances for a rate cut, traders said.
''This is a realization ... that it's likely the Fed still goes,'' said a head trader at a primary dealership, adding the expected rate cut ''is more of an insurance policy.''
A Washington Post article helped reassure Treasuries holders the Federal Open Market Committee (FOMC) was planning to lower rates, the head trader said.
Fed policy makers, according to the Post story, ''are concerned that fallout from the global financial turmoil, including a continuing drop in U.S. exports to some of the seriously affected countries in Asia, has increased the risk that the U.S. economy could drop into recession next year if interest rates aren't lowered.''
Adding further support to Fed easing expectations, Moody's Investors Service on Monday night cut Japan's credit rating to Aa1 from Aaa, citing the country's difficulty in resuscitating its economy and the government's worsening fiscal stance.
(Note: this article is ''in progress''; there will likely be an update soon.)
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