* Federal Reserve gives statement Wednesday
* Putin comments reduce East-West tension
* Consumer Price Index up 0.1 pct in Feb.
* Fed buys $1.15 bln in Treasuries maturing 2036-2043
By Sam Forgione
NEW YORK, March 18 U.S. Treasuries yields edged
lower on Tuesday on uncertainty ahead of the Federal Reserve's
two-day policy meeting and lingering concerns that East-West
tensions surrounding Ukraine could escalate.
The Fed is expected to continue to reduce its monthly bond
purchase program, but also alter its forward guidance when it
gives its statement on Wednesday after its meeting. The meeting
will be the first presided over by Fed Chair Janet Yellen.
"The message (Yellen) wants to convey is probably, 'We're
still accommodative but we're still tapering, and we're
flexible,' which is a very complicated message," said Kathy
Jones, fixed income strategist at Charles Schwab in New York.
Traders said uncertainty over the outcome of the Fed meeting
spurred some safe-haven demand for Treasuries.
The Fed previously said that it would not raise interest
rates until joblessness fell to at least 6.5 percent, a pledge
that policymakers thought would hold until at least mid-2015.
But that rate hit a five-year low of 6.6 percent in January,
before rising to 6.7 percent in February.
Meanwhile, Russian President Putin, while approving plans to
make Crimea part of Russia, said his country did not want
Ukraine to split further, which reduced some fears of an
escalation in East-West tensions.
Moscow's seizure of Crimea, denounced by the West as illegal
and in breach of Ukraine's constitution, has caused the most
serious East-West crisis since the end of the Cold War.
On Monday, the United States and the EU imposed sanctions on
a handful of officials from Russia and Ukraine accused of
involvement in Moscow's seizure of the Black Sea peninsula, most
of whose 2 million residents are ethnic Russians.
"It was encouraging this morning to hear Putin step down his
comments, but it still remains to be seen how this is going to
be played out," said George Rusnak, national director of fixed
income for Wells Fargo Private Bank in Philadelphia.
U.S. economic data on inflation in February, meanwhile,
largely met expectations, while weaker-than-expected housing
starts last month had a muted impact on Treasuries prices.
The Labor Department said on Tuesday its Consumer Price
Index nudged up 0.1 percent in February, in line with
economists' expectations, as a decline in gasoline prices offset
an increase in the cost of food.
The Commerce Department, meanwhile, said U.S. housing starts
slipped 0.2 percent in February, marking the third straight
monthly decline, while a rebound in building permits offered
some hope for the housing market.
"The data was pretty benign," said Rusnak of Wells Fargo.
The Federal Reserve bought $1.15 billion in Treasuries
maturing between Feb. 2036-Nov. 2043 on Tuesday, which had a
muted impact on Treasuries prices.
On Wall Street, major stock indexes gained following Putin's
comments. The benchmark Standard & Poor's 500 was last up
The 10-year U.S. Treasury note was last up 7/32
price to yield 2.672 percent, down slightly in yield from late
Monday, when the yield was at 2.70 percent. Bond yields move
inversely to their prices.
The 30-year U.S. Treasury bond was last up 5/32
in price to yield 3.62 percent, down slightly in yield from late
Monday, when the yield was at 3.63 percent.