By Sunny Oh

Federal Reserve is expected to raise rates on Wednesday

Treasury prices rose Tuesday, pushing yields lower, after stocks struggled to bounce back from their multisession rout amid an oil slump and a Federal Reserve meeting, where a rate hike is expected.

The 10-year Treasury note yield was down 3.2 basis points to 2.825%, its lowest since Aug. 23. The benchmark rate approached near 2.80%, the lowest of its trading range of the past seven months.

The 2-year note yield slipped 5.2 basis points to 2.650%, while the 30-year bond yield fell 3.7 basis points to 3.077%. Both maturities hit their lowest levels since Sep. 6. Bond prices move in the opposite direction of yields

Stirring up demand for haven assets, equities struggled to hold on to early gains as oil markets came under pressure. Analysts say a production glut may have driven the weakness in crude prices, but many cite its bearish implications for global growth as the reason for the muted investor sentiment. A U.S. crude benchmark fell more than 7% to $46.24 a barrel.

The S&P 500 and the Nasdaq Composite attempted to eke out gains, after falling to their lowest close since the fall of 2017 on Monday.

Market participants will be closely awaiting the Fed's policy decision on Wednesday. Against a backdrop of solid economic data, the central bank is still expected to raise rates for the fourth time this year, even as the slump in equities has Wall Street clamoring for a pause to the Fed's tightening cycle as soon as this week's meeting.

With a rate increase for December mostly baked in, traders will shift their focus to the Federal Open Market Committee's so-called dot plot, the economic and interest rate forecasts by the rate-setting body's members, which last pointed to three rate increases in 2019.

Analysts say the central bank may cut next year's rate hike projections. Futures for the fed-funds market, where traders can bet on the direction of monetary policy, only show one rate hike by the end of next year.

"What's embedded in market expectations is a dovish hike," Greg Staples, co-head of fixed income North America at DWS, told MarketWatch.

Read: Wall Street says Fed's 'quantitative tightening' program could end much sooner than Powell has flagged (http://www.marketwatch.com/story/wall-street-says-feds-quantitative-tightening-program-could-end-much-sooner-than-powell-has-flagged-2018-12-17)

On the data front, housing starts for November ran at a seasonally adjusted annual 1.256 million rate in November, 3.2% higher than in October. Economists polled by MarketWatch had expected it to come in at an annual pace of 1.23 million. The stronger-than-expected data could suggest weakness in the housing market may be overstated.

(END) Dow Jones Newswires

December 18, 2018 15:44 ET (20:44 GMT)