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TREASURIES-U.S. yields rise on BOJ's Kuroda remarks, corporate supply

* BOJ may consider exit strategy if inflation goal is reached

* Bond yields pressured by expected huge corporate bond supply

* Safe-haven bond holdings pared in wake of Trump's tariff plan

* Traders eye weekend elections in Germany, Italy

(Updates market action, adds quote) NEW YORK, March 2 (Reuters) - U.S. Treasury yields rose on Friday, with the 10-year yield bouncing back from a three-week low as the Bank of Japan's chief hinted at a possible exit from its ultra-easy policies if inflation hits its target in its fiscal 2019. The bond market also came under pressure as investors prepared a massive flood of corporate bond issuance next week, led by a $40 billion deal from drugstore chain CVS, according to IFR, a Thomson Reuters unit. The yield rise reversed the prior day's fall tied to a safe-haven bond market rally in reaction to President Donald Trump's plan for stiff tariffs on steel and aluminum, which raised fears of a trade war and surging costs for consumers.

"Markets don't want trade wars. The markets are pricing in that risk," said Boris Rjavinski, senior rate strategist at Wells Fargo Securities in New York. "The news from Japan also played a role." If the BOJ were to move away from its crisis-mode measures, it would follow in the footsteps of the U.S. Federal Reserve and other major central banks. "The BOJ's board members expect that prices will reach 2 percent around fiscal 2019. If this happens, there's no doubt that we will consider and debate an exit," Bank of Japan Governor Haruhiko Kuroda told parliament. The benchmark 10-year Treasury yield was 2.853 percent, up 5.1 basis points from late on Thursday. It touched a three-week low of 2.793 percent earlier on Friday. The two-year yield hit a two-week low of 2.197 percent before moving to 2.234 percent, up 2.8 basis points from Thursday, according to Reuters data. The spread between five-year and 30-year yields was 50.6 basis points, wider than the 50.2 basis points late on Thursday, Tradeweb data showed. Bond yields had fallen late Thursday through overnight trading on jitters about rising trade tension from Trump's tariffs on imported steel and aluminum before the BOJ news reversed their drop. Some analysts said it is unclear whether the tariff would ignite an all-out trade war. "The tariff is all intent purpose just a headline. There's is even some push-back against it here in the U.S.," said Jason Celente, senior portfolio manager at Insight Investment in New York. Meanwhile, traders await the outcomes of elections in Germany and Italy on Sunday. Pollsters forecast a hung parliament in Italy, with the anti-establishment 5-Star Movement to be the biggest single party. In Germany, Chancellor Angela Merkel's ruling conservative party faces stiff resistance from the Social Democrats to be part of an alliance. Election results that produce weak governing bodies or ones with anti-EU bias may spur safe-haven demand for Treasuries, analysts said. March 2 Friday 2:34PM New York / 1934 GMT Price

US T BONDS JUN8 143-18/32 -25/32 10YR TNotes JUN8 120-64/256 -12/32 Price Current Net Yield % Change

(bps)

Three-month bills 1.6125 1.6413 0.012 Six-month bills 1.8025 1.844 0.005 Two-year note 100-8/256 2.2337 0.028 Three-year note 99-158/256 2.3849 0.033 Five-year note 100-10/256 2.6165 0.043 Seven-year note 99-212/256 2.7772 0.048 10-year note 99-36/256 2.8497 0.048 30-year bond 97-156/256 3.1234 0.037 YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 61.40 2.00 30-year vs 5-year yield 50.60 0.45

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 25.25 -0.75

spread

U.S. 3-year dollar swap 21.75 -0.50

spread

U.S. 5-year dollar swap 9.50 -0.25

spread

U.S. 10-year dollar swap 0.75 0.00

spread

U.S. 30-year dollar swap -18.50 0.50

spread

(Reporting by Richard Leong; Editing by Jonathan Oatis and Tom Brown)