Treasury yields fell Monday ahead of the Federal Reserve’s midweek meeting that is expected to result in a rate cut of at least 25 basis points.

What are Treasurys doing?

The 10-year Treasury note yield

TMUBMUSD10Y, -0.34%

fell 2.5 basis points to 2.056%. The 2-year note yield

TMUBMUSD02Y, -0.21%

was down 2 basis points to 1.850%, while the 30-year bond rate

TMUBMUSD30Y, -0.02%

edged lower by 1.8 basis points to 2.582%.

What’s driving Treasurys?

All eyes will descend on Washington as the Fed is expected to carry out its first rate cut since the financial crisis at its July 30-31 meeting. Analysts say the U.S. central bank may announce an even earlier end to the shrinking of its $3.8 trillion portfolio of securities.

See: How the Fed could throw a nasty curveball at bond-market bulls with a ‘hawkish cut’

The rate-setting Federal Open Market Committee’s dovish actions, if consummated, would come in a backdrop of economic resilience, with few signs that a trade slowdown and faltering global growth momentum has spilled over into U.S. shores. The U.S. economy grew at an annualized pace of 2.1% in the second-quarter, higher than the 1.9% pace forecast of economists polled by MarketWatch.

U.S.-China trade talks are set to get under way, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer both arriving in Shanghai. Investors aren’t holding out hopes for a breakthrough, but said both sides may make concessions to advance negotiations.

Read: Modest expectations as U.S., China set to resume trade talks

The Treasury Department raised its borrowing estimate for the third-quarter as part of its quarterly refunding. It said it would borrow $433 billion during July and September, more than $274 billion from its previous estimate.

What did market participants’ say?

“The market is conditioned for an ease, and the Fed has been fervent in communicating that,” said Eddy Vataru, portfolio manager for Osterweis Total Return fund, in an interview with MarketWatch.

“Along with a 25-basis-point rate cut, this week’s FOMC statement will likely include the announcement that balance sheet shrinkage—aka QT, or quantitative tightening—is ending immediately. The QT program is currently scheduled to end in September, but in response to a question at his June press conference the chairman strongly implied that it will be stopped immediately if officials decide to cut rates before then,” wrote Jim O’Sullivan, chief economist for High Frequency Economics.

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