TREASURIES-Yields fall as Fed minutes, Powell speech in focus – Reuters

 (Adds Italian PM resignation, updates prices)
    * Fed to release minutes from July meeting on Wednesday
    * Fed Chairman Jerome Powell to speak on Friday
    * Italy's prime minister resigns 

    By Karen Brettell
    NEW YORK, Aug 20 (Reuters) - U.S. Treasury yields fell on
Tuesday as the prospect of more central bank easing boosted
demand for government debt, while concerns about Italy’s
government and Britain’s tumultuous exit from the European Union
fueled safe-haven buying.
    Investors are focused on meetings by the Federal Reserve and
the European Central bank next month, when the central banks are
expected to cut rates as both regions face slowing growth.
    The U.S. central bank will release minutes from its July
meeting on Wednesday, while Fed Chairman Jerome Powell is due to
speak on Friday, when he is expected to give guidance on whether
a rate cut is likely in September.
    “The major event is definitely Powell on Friday and we will
see how he talks about the markets and what the expectations are
for the September meeting,” said Justin Lederer, an interest
rate strategist at Cantor Fitzgerald in New York.
    The prospect of further U.S. rate cuts has increased since
the yield curve between two-year and 10-year notes
               inverted last Wednesday for the first time since
2007, signaling that a recession is likely in the next one to
two years.
    The Fed said in July that further rate decreases may not be
needed following its first cut in over a decade, but investors
will be looking to see if Powell gives a different view in light
of recent market activity.
    Interest rate futures traders are pricing in a 100 percent
chance of a September rate cut, according to CME Group’s
FedWatch tool.
    Benchmark 10-year notes             gained 13/32 in price to
yield 1.556%, down from 1.598% late on Monday.
    The two-year, 10-year yield curve flattened to 4 basis
points, from 6 basis points.
    Concerns about the collapse of Italy’s government and
Britain exiting the EU without an deal also created some
safe-haven demand on Tuesday.
    Italy's prime minister announced his resignation as he made
a blistering attack on his own interior minister, accusing him
of sinking the ruling coalition and endangering the economy for
personal and political gain.            
    The European Union rebuffed Prime Minister Boris Johnson's
demand that it reopen the Brexit divorce deal, saying Britain
had failed to propose any realistic alternative to an agreed
insurance policy for the Irish border.             

 (Editing by Nick Zieminski and Dan Grebler)

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