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TREASURIES-Yields inch higher, Fed meeting minutes in focus

* Fed meeting minutes on Wednesday in focus

* Treasury yield curve flattest since late 2007

* Trading expected to be light before Thanksgiving

NEW YORK, Nov 20 (Reuters) - U.S. Treasury yields inched higher on Monday as investors awaited minutes on Wednesday from the Feds last meeting, with no major economic releases due this week and trading expected to be subdued before the Thanksgiving holiday on Thursday. The U.S. central bank kept interest rates unchanged when it concluded its two-day meeting on Nov. 1 and pointed to solid U.S. economic growth and a strengthening labor market while playing down the impact of recent hurricanes. The Feds meeting minutes will be evaluated for any new indications that a rate hike is likely in December. "The highlight of the week should be the minutes on Wednesday," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. Interest rate futures traders are pricing in a 92 percent chance of a December rate hike, according to the CME Groups FedWatch Tool.

Benchmark 10-year notes were last down 2/32 in

price to yield 2.36 percent, up from 2.35 percent on Friday. The yield curve between two-year and 10-year notes also continued to flatten to 61 basis points, the flattest level since late 2007. The yield curve has flattened as investors price in the expectation that the Fed will continue to raise rates while the U.S. Treasury is also expected to increase debt issuance, with a focus on short- and intermediate-dated maturities. At the same time, low inflation and global demand for yield has supported longer-dated debt. Yields brieflY fell earlier on Monday in line with German government debt after German Chancellor Angela Merkel said her efforts to form a three-way coalition government had failed. The development put Germany into its worse political crisis for decades, raising the prospect of fresh elections and casting doubt over Merkel's future.

(Reporting by Karen Brettell Editing by Jonathan Oatis)

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