(Recasts, adds Fed minutes, comments, table, updates prices)
* Minutes say Fed to raise rates "fairly soon"
* Analysts view Fed minutes as dovish
* U.S. 5-year auction shows soft demand
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 22 U.S. long-dated Treasury debt
yields edged lower on Wednesday in choppy trading, after minutes
of the latest Federal Reserve monetary policy meeting struck a
cautious tone on raising interest rates, reducing expectations
of a hike next month.
According to the minutes released on Wednesday, many Fed
policymakers said it may be appropriate to raise rates again
"fairly soon" should jobs and inflation data come in line with
"The minutes are fairly dovish," said Jeff Kravetz, regional
investment director at U.S. Bank Wealth Management in
Scottsdale, Arizona. "The language used was 'fairly soon' that
they want to raise rates, which is a cautious statement."
Fed officials were concerned about the lack of clarity on
the new Trump administration's economic program, which has
clouded the outlook for monetary policy.
After the release of the minutes, the Fed funds futures
market was pricing in a roughly 18 percent chance of a March
rate hike, down from 22 percent on Tuesday, according to the CME
Fed Chair Janet Yellen said last week a rate increase would
be considered at every policy meeting, leading to speculation
that the next hike would come in March.
"We still think the Fed will delay until June," said Paul
Ashworth, chief U.S. economist at Capital Economics in Toronto.
"Furthermore, while many 'participants', which is Fed code
for all officials, (in the minutes) might be leaning toward an
earlier rate hike, the actual voting members of the FOMC
(Federal Open Market Committee) come across as slightly more
circumspect," he added.
U.S. 10-year notes were last up 2/32 in price to
yield 2.421 percent, compared with 2.427 percent on Tuesday.
Yields fell as low as 2.391 percent, their lowest level since
U.S. 30-year bond prices were almost flat,
yielding 3.040 percent. Yields earlier dropped to 2.999 percent,
their lowest in two weeks.
U.S. two-year note prices were also flat in
price, yielding 1.224 percent, compared with 1.23 percent late
The U.S. Treasury's $34 billion 5-year auction came out
weak, with the note clearing at 1.937 percent, higher than
expectations of 1.930 percent at the bid deadline.
There were $77.9 billion in bids for a 2.29 cover, versus
2.38 last month and the 2.44 average. Indirect bidders took just
58.2 percent, also below the prior month's take of 63.3 percent
and the 62.2 percent average.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by W Simon and