Strategists said range-bound trade with little conviction would characterize activity before Wednesday’s statement from the Federal Reserve at the conclusion of its two-day Federal Open Market Committee (FOMC) meeting.

“The FOMC remains the immediate focus leading to position-adjustment trading,” said John Spinello, chief fixed-income technical strategist at Jefferies & Co in New York.

The benchmark U.S. 10-year Treasury note traded up 3/32 in price while its yield eased to 3.41 percent from 3.42 percent late on Monday. Two-year notes rose 1/32, their yields easing to 0.90 percent from 0.92 on Monday.

Treasuries drew a bid as equities weakened overseas and stock index futures pointed to a lower opening on Wall Street.

Stocks recovered some losses after Berkshire Hathaway Inc said it would buy railroad Burlington Northern Santa Fe Corp for $100 per share in cash and stock, but a loss from UBS AG and news from Royal Bank of Scotland Plc and Lloyds Banking Group Plc spurred a move into safe-haven U.S. Treasuries, Spinello said.

Also supporting Treasuries were the U.S. Treasury’s lower projected borrowing need in the first fiscal quarter than forecast and an overnight rate increase in Australia that weighed on equities in Asia and Europe, analysts said.

However, new supply will remain a consideration for dealers as the Treasury will also announce the terms of next week’s three bond auctions on Wednesday.

On the economic indicator front, U.S. factory orders data due at 10 a.m. (1500 GMT) is expected show a 0.8 percent increase in September, reversing August’s 0.8 percent drop.

Signs of economic recovery could bolster investors’ risk appetite to the detriment of bond prices while any signs the recovery is faltering could boost the safe-haven appeal of government debt.

The most influential U.S. economic report this week is the October nonfarm payroll report due Friday.

The median of forecasts from economists polled by Reuters is for payrolls to have contracted by 175,000 in October after narrowing by 263,000 jobs in September.

Fed statement key

Market analysts on Wednesday will put the Fed statement under a microscope. At issue is whether more hawkish members of the Federal Open Market Committee, the Fed’s policy arm, will manage to make the Fed statement slightly less dovish by removing the word “extended” from the Fed’s current commitment to keep interest rates low for an extended period.

Five-year Treasury notes rose 4/32 in price on Tuesday, their yields easing to 2.31 percent from 2.33 percent late on Monday. Thirty-year bonds rose 4/32, their yields easing to 4.25 percent from 4.26 percent on Monday.

Spinello said 10-year Treasury yields would likely be in a range of 3.35 to 3.50 percent heading into the FOMC meeting.

The difference between short- and long-term yields would continue to widen, even if the Fed alters the language of its policy statement, he said.

“If, in fact, (the market has a) knee-jerk reaction to an altering of the language, which we do not expect to be policy-consequential, we will look at that as an opportunity to become friendly to the front end and for the yield curve steepening bias to continue,” Spinello said.