Treasuries Strengthen After Rate Cut

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Updated from 12:58 p.m. EST

Treasuries were stronger Tuesday after the

Federal Reserve's decided to cut the fed funds target rate to 2%, the 10th reduction this year.

The two-year note was recently gaining 3/32 to 100 22/32, yielding 2.38%, and the five-year was up 7/32 to 104 21/32, yielding 3.50%. The 10-year Treasury was climbing 8/32 to 105 27/32 to yield 4.26%, and the 30-year bond, which is being discontinued by the Treasury Department, was up 3/32 to 108 5/32, yielding 4.85%.

The Fed's policymaking arm, the

Federal Open Market Committee, announced its decision around 2:15 p.m. EST. The fed funds target rate is now at 2%. At the beginning of the year, the rate was 6.5%, but it has come down as the Fed has reduced rates throughout 2001, including three times since the Sept. 11 terrorist attacks.

Economists were expecting at least a quarter-point cut to come out of the meeting, but many were looking for a half-point reduction.