The Fed is expected to announce plans to rebalance its portfolio in favour of longer-dated bonds and so push long-term interest rates -- already near historic lows -- even lower in a move known as Operation Twist.

Ten-year notes shed 3/32 in price to yield 1.947 percent, not far off a yield of 1.879 percent reached last week, the lowest in at least 60 years.

Thirty-year bonds dipped 3.5/32 in price to yield 3.2054 percent . The 30-year yield had touched a low of 3.176 percent on Monday, the lowest since January 2009.

"It's the final position adjustment heading into the Fed. With many Tokyo players on holidays this week, volumes are very thin," said Akihiro Nagata, head of foreign bond trading at Sumitomo Mitsui Banking Co in Tokyo.

Market speculation that the Fed may adopt Operation Twist has helped longer-end Treasuries outperform compared to short-dated paper in recent weeks, causing the yield curve to flatten.

Members of the Fed's policy-setting committee are expected to announce their decision at about 2:15 p.m. (1815 GMT) at the conclusion of a two-day meeting.

Copyright Reuters, 2011