Treasury prices rebounded yesterday as accounts sought to cover short positions ahead of the Federal Reserve's Open Market Committee meeting next Tuesday.

Trading was light and the overall tone remained negative, but even modest short coverings were sufficient to drive prices higher as most players were unwilling to make major moves before the FOMC meeting on Tuesday. The benchmark 30-year Treasury bond ended the session up over 1/4 point, to yield 7.77%. Comments from former Federal Reserve vice chairman David W. Mullins that a 50-basis-point tightening might not be necessary helped bolster sentiment and allowed players to ignore further evidence of a strengthening labor market.

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