NEW YORK, Aug 23 (Reuters) - U.S. Treasury yields fell

on Friday after Federal Reserve Chair Jerome Powell, in prepared

remarks, gave his strongest signal yet that interest rates are

coming down most likely at the next policy meeting in September.

"The upside risks to inflation have diminished. And the

downside risks to employment have increased," Powell said in a

highly anticipated speech to the Kansas City Fed's annual

economic conference in Jackson Hole, Wyoming.

"The time has come for policy to adjust. The direction of

travel is clear, and the timing and pace of rate cuts will

depend on incoming data, the evolving outlook, and the balance

of risks."

After his remarks, the benchmark 10-year yield fell 5.7

basis points (bps) to 3.806%.

On the short end of the curve, the two-year yield, which

reflects interest rate expectations, dropped 7.4 bps to 3.936%

.