US T-Bonds Edge Down Ahead of FOMC Meeting

Treasurys kicked off an eventful week with modest price losses, as bond investors were caught between the continued carnage in emerging markets and the upcoming Federal Reserve's policy meeting at which the U.S. central bank is expected to announce a further move to taper its stimulus program.

In early trade, the benchmark 10-year note edged down 5/32 in price to yield 2.753%. The 30-year bond fell 7/32 in price to yield 3.664%. Bond prices rise when yields fall.

U.S. Treasurys rallied strongly last week, as a selloff in global equity and currency markets prompted investors to flee risky assets and take shelter in the safe-haven market. Yields on the benchmark 10-year Treasury notes fell to 2.737% at Friday's close, the lowest level in two months.

The market rout continued Monday, as Asian stock markets were sharply lower overnight, led by a 2.5% drop in the Nikkei index. The selloff also spilled into the European markets.

But the flight-to-safety trade was somewhat arrested, as many traders were cautious ahead of this week's big event: the monthly meeting by the Federal Open Market Committee. Fed officials are expected to announce a further trim its bond-buying program on Wednesday afternoon. In December, the central bank kicked off the long-awaited tapering with a $10 billion reduction, lowering the monthly purchase pace to $75 billion.

"A lot of guys are shaking up their positions ahead of the FOMC," said Gabriel Mann, an interest-rate strategist at RBS Securities Inc. "I'm assuming they want to be flat or at least as close to home as possible into the meeting."

As the benchmark Treasury yield declined by as many as 30 basis points so far this year, some investors might want to book some profits ahead of the time.