(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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