(Recasts with release of Fed meeting minutes and auction results, updates yields, adds analysts' comments) By Karen Pierog and Karen Brettell Aug 19 (Reuters) - U.S. Treasury yields rose on Wednesday after minutes from the Federal Reserve's July meeting indicated that yield caps or targets were not on the horizon. The benchmark 10-year yield was last up less than a basis point at 0.6752%. Many Fed policymakers determined that yield caps or targets were not warranted at this time but should remain an option for the future, according to the minutes. "It seems the market is quite displeased with the discussion about yield curve control specifically," said Tom Simons, a money market economist at Jefferies in New York. He added that the minutes suggest it is not likely to happen this year unless something significant changes either in the market or in the economy. If the Fed will not be engaging in yield curve control "these ultra-low yield levels that we've seen for the last couple of months maybe aren't quite as appropriate especially in light of how much supply Treasury is pumping into the market," Simons said. Meanwhile, the U.S. Treasury sold $25 billion of 20-year bonds at a high yield of 1.185%, which was around a basis point higher than where the debt was trading before the auction. The bid to cover ratio was 2.26 times. "It was a pretty weak auction," said Kim Rupert, senior economist at Action Economics in San Francisco. "I expected poor results after the fairly disappointing 30-year. There wasn’t much of a backup over the last couple of days with the Treasury market rallying after a big selloff last week." The 20-year yield was last up 1.5 basis points at 1.1658%. The auction marked the fourth and largest since the U.S. Treasury began offering 20-year bonds in May for the first time since 1986. It also followed last week's auction of $26 billion of 30-year bonds that was met with weak demand. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 53 basis points, nearly a basis point higher than at Tuesday's close. August 19 Wednesday 1:45PM New York / 1845 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1 0.1014 -0.005 Six-month bills 0.12 0.1217 0.000 Two-year note 99-247/256 0.1431 -0.002 Three-year note 99-226/256 0.1644 -0.008 Five-year note 99-222/256 0.2771 -0.002 Seven-year note 99-82/256 0.4746 0.003 10-year note 99-132/256 0.6752 0.006 20-year bond 99-72/256 1.1658 0.015 30-year bond 99-4/256 1.4154 0.016 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 6.75 -0.75 spread U.S. 3-year dollar swap 5.50 -0.50 spread U.S. 5-year dollar swap 3.75 -0.75 spread U.S. 10-year dollar swap -2.25 -0.50 spread U.S. 30-year dollar swap -41.25 0.00 spread (Reporting by Karen Pierog in Chicago and Karen Brettell in New York; Editing by Will Dunham and Kirsten Donovan)
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