Following the sharp pullback seen in the previous session, treasuries showed a notable rebound during trading on Tuesday.
Bond prices moved higher early in the day and saw further upside going into close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 8.6 basis points to 3.513 percent.
With the steep drop on the day, the ten-year yield largely offset the 9.3 basis points jump seen on Monday.
Treasuries regained ground after moving sharply lower on Monday amid lingering uncertainty about the outlook for interest rates.
While the Fed is widely expected to slow the pace of interest rate hikes next week, recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.
Traders are likely to pay close attention to the Fed’s accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.
In U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened in the month of October.
The report said the trade deficit widened to $78.2 billion in October from a revised $74.1 billion in September. Economists had expected the trade deficit to increase to $79.1 billion from the $73.3 billion originally reported for the previous month.
The wider trade deficit came as the value of exports slid by 0.7 percent to $256.6 billion, while the value of imports climbed by 0.6 percent to $334.8 billion.
The U.S. economic calendar remains relatively quiet on Wednesday, with traders likely to shrug off revised data on labor productivity and costs in the third quarter as old news.