*

Fed under pressure from Trump administration to lower

rates

rapidly

*

Market fully pricing in at least 25 bps rate cut, 6%

chance of

50 bps cut

*

Housing starts, building permits data softer than expected

By Chuck Mikolajczak

NEW YORK, Sept 17 (Reuters) - U.S. Treasury yields were

little changed on Wednesday as investors braced for the latest

policy statement from the Federal Reserve and comments from Fed

Chair Jerome Powell for clues on the path of monetary policy.

Yields have fallen in recent weeks as a spate of economic

data that indicated a softening of the labor market boosted

expectations the central bank will be more aggressive in cutting

interest rates. The 10-year note touched a 7-month low of 3.994%

last week.

Markets are fully pricing in a rate cut of at least 25 basis

points (bps) from the Fed, with a roughly 6% chance for an

outsized cut of 50 basis points, according to CME's FedWatch

Tool.

The yield on the benchmark U.S. 10-year Treasury note

fell 0.4 basis point to 4.022%.

The Fed has been under significant pressure from Donald Trump's

administration to rapidly lower rates, and Trump has attempted

to fire Fed Governor Lisa Cook while Stephen Miran, on leave as

the chair of Trump's Council of Economic Advisers, was just

sworn in as a member of the central bank's board on Tuesday.

"The participants of the FOMC have been more in the spotlight

this time around than they've been in the past, and so it'll be

interesting to see, there's so many pieces to this thing," said

Jim Barnes, director of fixed income at Bryn Mawr Trust in

Berwyn, Pennsylvania.

"It's the rate cuts, that's one piece of it, then the

summary of economic projections is another piece, but then the

dissenters and what they're looking for. There was just so much

noise heading into this one that it will be good to probably

just get it behind us, but it's important and it will be

interesting."

The yield on the 30-year bond shed 1.6 basis

points to 4.63%.

Earlier economic data showed U.S. single-family homebuilding and

permits for future construction dropped in August amid a glut of

unsold new houses and a softening labor market, unfazed by

falling mortgage rates.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 50.4 basis points.

The two-year U.S. Treasury yield, which typically

moves in step with interest rate expectations for the Fed, edged

up 0.6 basis points to 3.516%.

The breakeven rate on five-year U.S. Treasury

Inflation-Protected Securities (TIPS) was last at

2.437% after closing at 2.443% on Tuesday.

The 10-year TIPS breakeven rate was last at

2.364%, indicating the market sees inflation averaging about

2.4% a year for the next decade.

(Editing by Nick Zieminski)