* 10-yr, 30-yr yields rise as Fed seen likely to taper
* Shorter-dated debt rallies as rates seen likely to stay
* Traders betting on curve flattening hit stop loss triggers
By Karen Brettell
NEW YORK, Nov 20 (Reuters) - Long-dated U.S. Treasuries
yields rose to two-month highs on Wednesday, but shorter-dated
yields fell after the Federal Reserve minutes showed the U.S.
central bank is likely to hold interest rates at record lows for
several years, even after it ends its bond purchases.
Benchmark 10-year notes and 30-year bonds accelerated losses
after the Fed minutes from October's meeting said bond purchases
could start to slow at one of its next few meetings if the
economy improved enough to warrant it.
The yields had increased earlier on Wednesday after St.
Louis Fed President James Bullard told Bloomberg TV that a solid
U.S. jobs report for November would increase the likelihood that
the Federal Reserve would start to scale back bond buying at its
meeting next month.
Short- and intermediate-dated debt rallied, however, sending
the yield gap between 5-year notes and 30-year bonds wider as
traders increased bets that the Fed will hold rates at record
lows until 2016, or later.
"The feeling is that they are definitely trying to guide the
market to believing that tapering doesn't necessarily represent
a rate hike," said Sean Murphy, a Treasuries trader at Societe
Generale in New York.
Ten-year notes were last down 20/32 in price to
yield 2.78 percent, up from 2.71 percent late on Tuesday.
Thirty-year bonds fell 1-21/32 in price to yield
3.90 percent, up from 2.80 percent on Tuesday.
Five-year notes gained 2/32 in price to yield
1.34 percent, down from 1.36 percent.
A number of trades that had been placed to benefit from a
flattening yield curve also hit stop loss triggers as the curve
steepened, adding to the selloff of long-dated Treasuries,
At its policy meeting, the central bank voted to keep buying
bonds at an $85 billion monthly pace, delaying a decision to
start scaling back the program until it saw more evidence of a
durable recovery that could sustain job creation.
Economists surveyed by Reuters believe the Fed will begin
reducing its monthly bond purchases in March 2014 - with a small
chance of doing so in January - but with an accompanying
commitment to keep interest rates at record lows, a poll showed