August 24, 2018 / 1:04 PM / 3 months ago

TREASURIES-Yields rise before Fed's Powell speaks

* Fed Chairman Powell to speak at Jackson Hole

* Traders increase odds of two more rate hikes this year

By Karen Brettell

NEW YORK, Aug 24 (Reuters) - U.S. Treasuries yields rose on Friday as investors awaited a speech by Federal Reserve Chairman Jerome Powell for any new indications on the U.S. central bank’s pace of rate hikes.

Powell is set to speak at 10 a.m. ET (1400 GMT) at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming.

Increasing consensus on the need to continue raising U.S. interest rates was on display at the start of the global central bankers meeting, as the longstanding distinction between so-called policy hawks, centrists and doves blurs in the face of falling unemployment.

Still some saw Powell as unlikely to give much further insight on the Fed’s rate path for this year.

“He could put in some new ideas or comment on current discussions and that would move the market, but I would say the odds of that is less than 50/50,” said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee.

The odds of two additional hikes this year increased this week as Fed officials were seen as more hawkish.

Interest rate futures traders are pricing in a 98-percent chance of a rate hike at the Fed’s September meeting, and a 68 percent chance of an additional hike in December, according to the CME Group’s FedWatch Tool. That is up from 94 percent and 64 percent, respectively, a week ago.

Powell’s speech will also be watched for any response he might offer to criticism by U.S. President Donald Trump, who told Reuters on Monday that he is “not thrilled” with rate increases during Powell’s term as Chairman.

Kansas City Federal Reserve Bank President Esther George and Dallas Fed President Robert Kaplan both said that Trump’s comments won’t influence the Fed’s decision making.

Treasuries have been supported this week by safety buying as investors consider the impact of legal woes for two former Trump advisors.

Trump’s former lawyer Michael Cohen pled guilty to campaign finance violations on Tuesday while former campaign manager Paul Manafort was convicted on charges of tax and bank fraud.

U.S. and Chinese officials ended two days of talks on Thursday with no major breakthrough as their trade war escalated with activation of another round of dueling tariffs on $16 billion worth of each country’s goods.

Editing by Nick Zieminski

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