June 19, 2019 / 6:34 PM / a month ago

TREASURIES-U.S. yields fall after Fed signals rate cuts this year

    * Fed holds rates steady, but signals cuts this year
    * U.S. yields fall across the board
    * U.S. two-year yields slide to 2-week lows

 (Recasts, adds Fed statement, analyst comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, June 19 (Reuters) - U.S. Treasury yields turned
lower on Wednesday after the Federal Reserve held interest rates
steady, as expected, but flagged possible rate cuts of as much
as half a percentage point later this year.
    U.S. yields hit session lows after the Fed decision, with
those on two-year notes hitting two-week troughs, after trading
higher all day.
    The U.S. central bank said it "will act as appropriate to
sustain" the economic expansion as it approaches the 10-year
mark and dropped a promise to be "patient" in adjusting rates.
Nearly half its policymakers now show a willingness to lower
borrowing costs over the next six months.
    "Looking at the economic data it would be a tough case to
cut rates today. We’re still running at really low unemployment
rates," said Chris Cordaro, chief investment officer at
RegentAtlantic in New York.
    "The economy is starting to slow but it's not coming
anywhere close to potentially dipping into a recession. It would
be premature today to cut rates and even maybe in July."
    In afternoon trading, U.S. 10-year note yields fell to
2.045% from 2.058% late on Tuesday.
    Yields on U.S. 30-year bonds dropped to 2.551%,
from 2.552% on Tuesday.
    At the short end of the curve, U.S. 2-year yields slid to
two-week lows of 1.796% from Tuesday's 1.862%. They
were last at 1.802%.
    
      June 19 Wednesday 2:25PM New York / 1825 GMT
                                                      
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             2.1525       2.2003    -0.026
 Six-month bills               2.1025       2.1605    -0.036
 Two-year note                 100-156/256  1.8046    -0.057
 Three-year note               100-4/256    1.7446    -0.054
 Five-year note                100-248/256  1.7943    -0.037
 Seven-year note               101-100/256  1.9102    -0.023
 10-year note                  102-236/256  2.0474    -0.011
 30-year bond                  106-176/256  2.5538    0.002
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         2.50        -0.25    
 spread                                               
 U.S. 3-year dollar swap         2.00         0.00    
 spread                                               
 U.S. 5-year dollar swap        -1.50         0.00    
 spread                                               
 U.S. 10-year dollar swap       -6.50        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -32.50        -0.25    
 spread                                               
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additonal reporting by
David Randall; Editing by Nick Zieminski and James Dalgleish)
  
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