* Fed's Clarida says rates nearing neutral level
* Fed's Kaplan, in Fox interview, warns about slowing global
growth
(Adds comments by analyst and Fed officials, table, byline;
updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 16 (Reuters) - U.S. Treasury yields retreated
on Friday after a top Federal Reserve official said U.S.
interest rates are nearing the central bank's estimates of a
neutral level, suggesting that the current tightening cycle may
soon end.
In a CNBC interview at the U.S. central bank's Washington
headquarters, Fed Vice Chair Richard Clarida said he did not
believe the Fed had raised rates too much or too quickly.
But he noted that the Fed needs to be particularly
data-dependent as rates near the 2.5 percent to 3.5 percent
"neutral" range that neither stimulates nor brakes economic
growth.
U.S. two-year yields, the maturity most sensitive to rate
expectations, dropped to two-week lows, while the benchmark
10-year yield fell to 3.018 percent, also a two-week low.
"The big driver right now is Fed speech," said Guy LeBas,
chief fixed income strategist, at Janney Montgomery Scott in
Philadelphia.
"Clarida's comments were the first public statement since
being appointed vice chair. He indicated a modestly dovish bent
on Fed policy, and not a particularly aggressive stance," he
added.
In an interview with Fox Business News on Friday, Dallas Fed
President Robert Kaplan said the U.S. economy is stronger than
he had thought but faces headwinds next year from weaker global
economic conditions, as well as fading impact from President
Donald Trump's tax reform.
Chairman Jerome Powell on Wednesday had also cited slowing
global growth as an emerging concern among Fed officials as they
debate how much further and how quickly to raise their
short-term policy rate.
"The one thing that is worth noting that all three - Powell,
Clarida, and Kaplan referenced negative feedback from foreign
economic conditions," Janney's LeBas said.
"They also used fairly similar language too that suggests
that the Federal Reserve is concerned about policy implications
from global growth," he added.
In early trading, U.S. 10-year note yields fell as low as
3.081 percent, from 3.118 percent late Thursday.
Yields were last at 3.084 percent.
U.S. 30-year bond yields were down at 3.348 percent
, from 3.366 percent on Thursday.
On the short end of the curve, U.S. two-year yields slid to
a two-week trough of 2.812 percent, compared with Thursday's
2.862 percent.
November 16 Friday 11:16AM New York / 1616 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 2.315 2.3604 -0.006
Six-month bills 2.44 2.5041 -0.011
Two-year note 100-28/256 2.8164 -0.046
Three-year note 100-10/256 2.8612 -0.052
Five-year note 99-232/256 2.8953 -0.050
Seven-year note 100-16/256 2.9898 -0.040
10-year note 100-84/256 3.0865 -0.032
30-year bond 100-116/256 3.3509 -0.015
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 19.75 0.25
spread
U.S. 3-year dollar swap 17.25 0.00
spread
U.S. 5-year dollar swap 14.50 0.25
spread
U.S. 10-year dollar swap 6.25 0.00
spread
U.S. 30-year dollar swap -11.25 -0.75
spread
(Reporting by Gertrude Chavez-Dreyfuss
Editing by Chizu Nomiyama and Richard Chang)
