U.S. Treasury yields slipped for a second day early Tuesday, as stock futures gave back ground again, with a auction for the bond-market’s benchmark maturity in the afternoon.

What are Treasurys’ doing?

The 10-year Treasury note yield

TMUBMUSD10Y, -0.67%

  retreated 2.8 basis points to 1.803%, while the 2-year note rate

TMUBMUSD02Y, -0.24%

  was down 2.4 basis points to 1.603%. The 30-year bond yield

TMUBMUSD30Y, -0.89%

  slipped 2.9 basis points to 2.236%. Bond prices move inversely to yields.

What’s driving Treasurys?

The Treasury Department will sell $24 billion of 10-year notes at 1 p.m. ET ahead of the Federal Reserve’s policy update on Wednesday, when the central bank is expected to keep monetary policy unchanged. Nonetheless analysts said they did not expect any large moves in Treasuries ahead of the Fed meeting, keeping the 10-year benchmark rate hovering around 1.80%.

See: Get ready for QE4, says Credit Suisse analyst, as Fed fails to calm short-term markets

On the international trade front, the South China Morning Post reported that though a partial trade deal may not be reached within this year, tariffs due to kick in on Dec. 15 aren’t expected to be put in place, citing sources close to the talks.

In addition, news reports indicate that the U.S. Democratic party which controls the House and President Donald Trump were close to an agreement to vote on the revamped North American trade pact with Mexico and Canada agreed earlier.

U.S. domestic politics may also draw attention also as House Democrats are set to announce their next steps in an impeachment inquiry against Trump, with the expectation that formal articles of impeachment will be released.

The bullish tilt to the overnight bond-market action reflected the weakness in equities. Futures trading for the S&P 500

SPX, -0.32%

  and Dow Jones Industrial Average indexes

DJIA, -0.38%

  point to a lower open for Wall Street on Tuesday.

What did market participants’ say?

“The focus for the market continues to be the 10-year auction today at 1 pm and China trade headlines,” wrote Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities. But the Fed and European Central Bank meetings would “play a larger role” in dictating trading for the rest of the week, he said.

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