TREASURIES-Prices gain before Fed statement

* Fed meeting in focus for rate path clues

* Solid German debt auction boosts Treasury prices

By Karen Brettell

NEW YORK, Sept 20 (Reuters) - U.S. Treasuries prices gained

slightly on Wednesday as investors awaited the conclusion of the

Federal Reserve’s two-day meeting for new indications on whether

the U.S. central bank is likely to raise interest rates against

this year.

The U.S. central bank is widely expected to announce that it

will begin paring its bond holdings, and many analysts and

investors expect the reductions may begin in October.

The Fed will also update its economic projections, known as

its “dot plot,” which will be used to evaluate whether an

interest rate increase in December is likely.

“Everyone will be watching the dot plot,” said Ian Lyngen,

head of U.S. rates strategy at BMO Capital Markets in New York.

“Even (Taiwan OTC: 6436.TWO - news) if they don’t decrease the dots for 2018 and 2019, any

backup in yields will ultimately prove to be a buying

opportunity because there is still a great deal of economic

uncertainty at this point, and there’s a lot of data between now

and the December meeting,” Lyngen said.

Benchmark 10-year notes were last up in 3/32

price to yield 2.232 percent, from 2.243 percent on Tuesday.

Traders will also be closely watching any comments the Fed

makes on inflation, which has remained below the Fed’s 2-percent

target. Expectations of a December rate hike increased after

data last Thursday showed that U.S. consumer prices accelerated

in August.

Futures interest rate traders are now pricing in a

62-percent chance of a December rate increase, according to the

CME Group (Kuala Lumpur: 7018.KL - news) ’s FedWatch Tool.

Traders are also looking for any clarity on personnel

changes as the end of Fed Chair Janet Yellen’s term approaches

and after the resignation of Vice Chair Stanley Fischer earlier

this month.

A solid auction of German 30-year government debt helped

boost Treasury prices earlier on Wednesday.

(Editing by Nick Zieminski)

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