TREASURIES-Yields rise as Fed eyes earlier start to rate hikes

    (Recasts with Fed meeting statement; updates yields)
    By Karen Pierog
    CHICAGO, June 16 (Reuters) - U.S. Treasury yields shot up on
Wednesday after Federal Reserve policymakers moved up their
projections for commencing interest rates hikes to 2023 from
2024 as the economy recovers from the coronavirus pandemic.
    At the conclusion of its two-day policy meeting, the Fed
disclosed that 11 out of 18 officials were projecting at least
two quarter-point interest rate increases in 2023 even as the
central bank pledged to keep a supportive policy in place to aid
the ongoing jobs recovery.
    The benchmark 10-year yield was last up 5.6
basis points at 1.555%, its highest level in a week.
    With inflation rising faster than expected and the economy
bouncing back quickly, the market had been looking for clues of
when the Fed may alter the policies put into place last year to
combat the economic fallout from the pandemic, including a
massive bond-buying program.
    The Fed raised the interest it pays on excess reserves
(IOER) to 0.15% from 0.1% and the rate on overnight reverse
repurchase agreements to 0.05% from 0%.
    The two-year Treasury yield was last 3 basis
points higher at 0.1971%.
    A closely watched part of the yield curve that measures the
gap between yields on two- and 10-year Treasury notes
 was last about 3 basis points steeper at 135.31
basis points.
    The yield curve between five-year notes and 30-year bonds
 flattened by about 8.52 basis points to 132.01
basis points.
   June 16 Wednesday 2:35PM New York / 1835 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.0425       0.0431    0.018
 Six-month bills               0.0575       0.0583    0.017
 Two-year note                 99-220/256   0.1971    0.030
 Three-year note               99-144/256   0.3971    0.055
 Five-year note                99-106/256   0.8711    0.086
 Seven-year note               99-222/256   1.27      0.076
 10-year note                  100-164/256  1.555     0.056
 20-year bond                  101-244/256  2.1291    0.012
 30-year bond                  103-232/256  2.1961    -0.003

                               Last (bps)   Net
 U.S. 2-year dollar swap         7.50        -0.25
 U.S. 3-year dollar swap         9.25        -0.50
 U.S. 5-year dollar swap         6.75        -0.25
 U.S. 10-year dollar swap       -3.00         0.00
 U.S. 30-year dollar swap      -30.75         1.25

 (Reporting by Karen Pierog; Editing by Leslie Adler)

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