TRÉSORIES-U.S. returns collapse after Draghi's comments; Fed decision to come

                * Draghi says the ECB will launch more stimulus if inflation remains stable
low
* European bond yields fall after Draghi's comments
* The Fed's decision is imminent Wednesday; no movement planned

(Add comments, update prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 18 (Reuters) - US Treasury yields plummeted
Tuesday, in line with the European market, after the European negotiations
Central Bank President Mario Draghi has alluded to more stimulus if
Regional inflation fails to get closer to its goal.
US 10-year benchmark rates have fallen to their lowest level since
beginning of September 2017, while yields at age 30 reach their lowest
since the end of October 2016.
"(We) will use all the flexibility of our mandate to
fulfill our mandate - and we will do it again to meet all
challenges for price stability in the future, "said Draghi
Tuesday.
German bond yields hit unprecedented lows
negative territory, and French yields at 10 years have
negative for the first time since at least 1985 after Draghi's
comments.
"Draghi was extremely dovish and this had a big impact on
Treasures as we expect the Federal Reserve, "said Ellis
Phifer, market strategist at Raymond James in Memphis,
Tennessee.
The Fed will not lower rates this month or will not be as dovish as
Draghi, he added. "I think that there are still signs that the United States
States is stronger than Europe, but obviously Europe is becoming a
problem for global growth if it continues to decline. "
The Fed begins its two-day meeting on Tuesday. Analysts
expect the Fed to keep its interest rates at the meeting but
think he could change his rate forecasts and change his language
prepare the ground for a possible easing this year.
In the afternoon, US 10-year note yields fell to
2.056% from 2.086% late Monday after reaching
2016, the lowest since September 2017.
US 30-year yields dropped to 2.556%,
from 2.547% on Mondays. Previously, 30-year yields had fallen to a
2.513% in almost two and a half years.
In the short term, US 2-year yields were down
slightly at 1.862% of Monday's 1.865%.
Since the beginning of the year, 10-year and 2-year yields have
dropped around 63 basis points, on the way to their steepest
decline since 2014 and 2008, respectively.
John Bellows, portfolio manager at Western Asset, said that
The Fed's focus on low inflation creates an "undeniably dovish
"backdrop" of monetary policy and helped to reduce
yields this year.
"The current market price of the Fed's hikes is consistent with
worse for growth and inflation than we expect, "he said.
I said. "The low inflation environment will limit any upward movement
yields. "
US Treasury prices rose earlier in response to a decline in the US dollar.
announces Monday that Washington would deploy another 1,000
troops in the Middle East, citing concerns about a threat of
Iran. On Tuesday, Iran said it would not wage war on any
nation.

Tuesday, June 18th at 14:50 EDT (1850 GMT):

Net current price
Yield in%
(Bps)
Three months bills 2,1775 2,22262 0,028
Six-month notes 2.1375 2.1969 -0.002
Two-year bill 100-127 / 256 1.8643 -0.001
Three-year note 99-218 / 256 1.8012 -0.003
Five-year note 100-202 / 256 1.8324 -0.015
Seven-year note 101-60 / 256 1.9342 -0.024
Note 10 years 102-212 / 256 2.0578 -0.028
30-year bond issue 106-200 / 256 2.5495-0.027

SWAP SPREADS DOLLAR
Last (bps) net
Change
(Bps)
Swap in 2-year US dollars 2.50 to 0.75
spread
US dollar swap at 3 years 1,75-0,50
spread
US dollar swap at age 5 -1.50 -0.25
spread
US dollar swap at 10 years - 6.25 - 0.25
spread
30-year US dollar swap -32.00 0.00
spread

(Report by Gertrude Chavez-Dreyfuss, edited by Andrea Ricci
and Richard Chang)