U.S. Treasuries were mixed in anticipation of tomorrow's

Federal Open Market Committee meeting. But like the stock market, the bond market was subdued today, as investors count down to 2:15 p.m. EDT tomorrow, when

Alan Greenspan and his crew are expected to lower interest rates for the fifth time this year.

The two-year note, which moves most dramatically to expectations of a change in monetary policy, lately gained 3/32 to 99 16/32, yielding 4.272%. Yields drop when Treasury prices rise. The 10-year benchmark note rose 1/32 to 96 23/32, dropping the yield to 5.437%, while the

30-year Treasury bond, otherwise known as the long bond, slipped 2/32 to 93 8/32, yielding 5.856%.

The Fed has already slashed rates four times since Jan. 3, from 6.5% to the current 4.5% level, cutting 50 basis points each time. The May

fed funds futures contract is pricing in an 85% chance the Fed will ease interest rates by another 50 basis points to 4%.

TheStreet.com's

David Gaffen recently examined

the implications of the Fed's rate cutting.

Traders believe that since the market is already pricing in a cut of 50 basis points, the focus will be on the FOMC's statement for clues on the state of the economy and the future. The bond market, a good indicator of investor sentiment for the economy, has been expecting an economic recovery, as the

yield curve has been getting steeper.

"We feel the front end will rally

with a 50 basis-point cut and meet with some curve steepening," Marty Brennan, head of government trading at

UBS Warburg

said. "The long end is concerned about inflation, and that's why it hasn't rallied." Another head trader, who refused to be named, said the bond market is "in for some trouble" if the Fed decides to ease only by 25 basis points.

Recent economic data have been mixed. Treasuries

traded off last week in reaction to the stronger-than-expected consumer sentiment numbers,

retail sales

data and April's

producer price index

. This morning, the

industrial production and capacity utilization data for April, released by the Fed, came in far weaker than expected, underscoring a continuing contraction in the manufacturing sector. Today's data corroborated the latest

purchasing managers' index

for April, which

indicated that businesses still face falling production as they continue to cut back on employment and reduce inventories.