×

TREASURIES-Bonds steady before Fed meeting minutes

* Fed meeting watched for signs of Dec rate hike

* Durable goods orders fell in October

NEW YORK, Nov 22 (Reuters) - U.S. Treasury yields were steady on Wednesday before the Federal Reserve is due to release minutes from its latest meeting, with trading volumes seen subdued before Thursdays Thanksgiving holiday. The Feds meeting minutes will be evaluated for any new indications that a rate hike is likely in December, with market participants seeing the rate hike as all but certain. The expectation for a move in December is very solid, said Lou Brien, a market strategist at DRW Trading in Chicago. Interest rate futures traders are pricing in a 92 percent chance of a December rate hike, according to the CME Groups FedWatch Tool. The Treasury yield curve, however, was seen as reflecting concerns about long-term growth and inflation even as the U.S. central bank continues its path towards normalizing monetary policy. Inflation is not playing along with the pace of normalization and so the confidence that the market is putting on a rate hike with the PCE core at levels that are as low as theyve been in a couple of years, means that the yield curve should flatten, Brien said. The core personal consumption expenditures (PCE) price index has consistently undershot the Fed's 2 percent target for more than five years. 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.

Benchmark 10-year notes were last up 1/32 in

price to yield 2.36 percent, little changed from Tuesday. The yield curve between two-year notes and 10-year notes steepened to 60 basis points, after falling to 57.4 basis points on Tuesday, the flattest level since late 2007. Yields briefly fell after data showed that new orders for key U.S.-made capital goods unexpectedly fell in October after three straight months of hefty gains, but a sustained increase in shipments pointed to strong momentum in the economy as the year winds down.

(Editing by Susan Thomas)

)