By Sam Goldfarb 

U.S. government-bond prices climbed Wednesday ahead of the conclusion of the Federal Reserve's two-day policy meeting, suggesting some investors think the central bank could open the door to interest-rate cuts in the coming months.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 1.617%, according to Tradeweb, compared with 1.642% Tuesday.

Yields, which fall when bond prices rise, have declined in recent days in response to speculation that China's coronavirus outbreak could hurt the global economy and push the Fed to lower short-term interest rates.

Though the Fed is expected to keep rates unchanged Wednesday, federal-funds futures -- which investors use to bet on the path of central-bank policy -- show investors think there is a 57% chance that the Fed will cut rates by the end of its September meeting, according to CME Group data. That is up from 46% a week ago and 38% a month ago.

Expectations for lower interest rates set by the Fed tend to increase demand for shorter-term Treasurys by making their yields look more attractive by comparison. Growth fears, meanwhile, also boost longer-term Treasurys by increasing the appeal of safer assets and lowering expectations for inflation.

In recent trading, the yield on the two-year Treasury note was 1.435%. That was down from 1.457% Tuesday and 1.569% on Jan. 17.

The Fed cut rates three times last year, lowering their benchmark federal-funds rate to a range between 1.5% and 1.75%, after raising it four times in 2018.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

January 29, 2020 11:19 ET (16:19 GMT)

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