Prices of Treasury coupon securities moved modestly lower today in another trading session characterized by lack of activity. There was some economic data which painted a mixed picture but many traders are in a risk averse posture ahead of the FOMC statement tomorrow.The yield on the benchmark 2 year note has jumped 4 basis points to 2.53 percent. The yield on the 5 year note has climbed 4 basis points to 3.25 percent. The yield on the benchmark 10 note has risen 4 basis points to 3.97 percent and the yield on the Long Bond is up 2 basis points to 4.58 percent.

The 2year/10 year spread is unchanged at 144 basis points.

The 2year/5 year/30 year butterfly has cheapened 2 basis points to 61 basis points.

Economic data released today painted a mixed picture. The core PCE rose 0.3 in July and 2.3 percent from a year ago.

The headline deflator was 0.8 percent and the year over year level is now 4.1 percent. That is the highest level for that inflation gauge since 1991.

Real consumer spending declined 0.2 percent. Economists at JPMorgan expect that consumption in Q3 will be flat.

Tomorrow is the day of the FOMC meeting and hopefully the orderly process of underwriting debt will resume when that statement clears the air.

One trader noted that with the Olympics about to begin, many Chinese investors were on holiday. He worried that this would reduce participation in the auctions. Another salesman with whom I speak thought that at yields of 4.00 percent and cheaper that the Chinese would be active participants in the 10 year auction.