By Sunny Oh

Treasury yields ticked up Monday as market participants prepared for a midweek Fed policy meeting that could help set the stage for the tapering of the central bank's $4.5 trillion balance sheet.

The yield on the 10-year Treasury note moved up 0.3 basis point to 2.244%. The 2-year note's yield rose 0.8 basis point to 1.353%, while the 30-year bond yield rose 1.2 basis point to 2.823%.

Yields backed up to pare last week's decline ahead of a two-day meeting of Federal Reserve policy makers that begins Tuesday. Although investors expect few changes (http://www.marketwatch.com/story/stocks-brace-for-volatility-as-earnings-peak-weak-fed-meeting-loom-2017-07-22) to the language of the policy statement, they will closely watch for signs that weakening economic data have unnerved members of the interest-rate setting committee. Market participants still expect the central bank to signal its plans to reduce its balance sheet in September on Wednesday, even as it pushes back the schedule for higher rates.

"The FOMC appears to have put rate normalization on the back burner for the time being," wrote Ward McCarthy, chief financial economist for Jefferies, referring to the central bank's Federal Open Market Committee.

Though the tapering of the Fed's bloated balance sheet has left some jittery about the potential impact (http://www.marketwatch.com/story/will-the-feds-balance-sheet-unwind-catch-investors-by-surprise-2017-05-03) on the Treasury market, other argue the gradual rate of the balance sheet roll-off is unlikely to trigger investors' flight from the largest market for government paper in the world.

Read:Jamie Dimon says QE unwind could catch investors by surprise (http://www.marketwatch.com/story/jamie-dimon-says-qe-unwind-could-catch-investors-by-surprise-2017-07-11)

The International Monetary Fund lon Sunday lowered its U.S. growth forecast for 2017 to 2.1% from 2.3% as economists cut their expectations for Trump's pro-growth agenda to juice the economy. This reflected that "fiscal policy will be less expansionary going forward than previously anticipated," according to their World Economic Outlook update (http://www.imf.org/en/Publications/WEO/Issues/2017/07/07/world-economic-outlook-update-july-2017). On the other hand, growth estimates for Europe were raised with the exception of the U.K.

See: IMF cuts U.S. growth forecast for 2017, 2018 (http://www.marketwatch.com/story/imf-cuts-us-growth-forecast-for-2017-2018-2017-07-24)

Traders will look ahead to existing home sales data set for release at 10 a.m. Eastern. Over the week, the Treasury Department will also sell $88 billion of U.S. government paper in tenors ranging from 2-year to 7-year. Auctions can influence price and trading for Treasurys by flooding the market with new issuance, raising rates.

(END) Dow Jones Newswires

July 24, 2017 09:43 ET (13:43 GMT)