* Traders square positions ahead of expected Wed. Fed rate
* 30-,10-year yields hit 3-month highs overnight
* Interest rate futures imply 95.2 pct chance of rate hike-
By Sam Forgione
NEW YORK, March 14 U.S. Treasury yields edged
lower on Tuesday, with those on long-dated and benchmark bonds
retreating from three-month highs touched overnight as traders
neutralized bets on the eve of a Federal Reserve policy
While a rate increase from the Fed on Wednesday was largely
anticipated, the question of whether policymakers would signal a
more aggressive pace of monetary tightening remained less
In overnight trading, yields touched three-month highs of
3.215 percent for 30-year Treasuries and 2.629 percent for the
10-year. They moved lower, though, as traders looked to offset
recent selling of Treasuries ahead of the Fed statement by
buying back U.S. government debt, a strategy known as
Interest rates futures implied traders saw a 95.2 percent
chance the Fed would announce it was raising rates by a quarter
percentage-point at the end of its two-day policy meeting, CME
Group's FedWatch program showed. Those expectations were up from
93.0 percent on Monday.
"Markets are staying relatively quiet in front of the Fed,"
said Lou Brien, market strategist at DRW Trading in Chicago. He
said weakness in riskier U.S. stocks also stoked demand for
safe-haven U.S. Treasuries.
Fed policymakers' projections could suggest four rate hikes
this year instead of the three projected in December, said Ellis
Phifer, market strategist at Raymond James in Memphis,
Analysts said trading volumes appeared to be thin because of
a blizzard in the northeastern United States, possibly leading
to exaggerated yield moves throughout the day.
Benchmark 10-year Treasury notes were last up
4/32 in price, with yields falling to 2.593 percent from 2.607
percent late on Monday.
U.S. 30-year Treasuries prices were up 9/32.
Yields dipped to 3.176 percent from 3.192 percent after hitting
a three-month high of 3.215 percent overnight.
U.S. two-year notes, which are considered most
vulnerable to Fed policy, were last roughly flat in price to
yield 1.372 percent.
Besides the Fed statement, investors were awaiting the
impact of central bank meetings in Britain and Japan, a
gathering of G20 finance chiefs, U.S. President Donald Trump's
first budget and the results of a tense election in the
(Reporting by Sam Forgione; Editing by Lisa Von Ahn)