CASH-Bonds gain as investors seek protection from falling stocks


 (Adds quotes, details on stocks and Fed, updates prices)
    * Stock decline increases demand for bonds
    * U.S. 10-year yields lowest since March 1

    By Karen Brettell
    NEW YORK, March 21 (Reuters) - U.S. Treasury yields fell to
three-week lows on Tuesday as stock markets tumbled, raising
demand for low-risk U.S. government debt, with analysts citing
frustration with the pace of the Trump administration's fiscal
plans as a factor behind the move.
    Wall Street fell sharply on Tuesday with the S&P 500 and Dow
Jones Industrial Average down around 1 percent. They are on
track for their worst one-day percentage declines since before
Trump's election victory in November.             
    "Stocks are down, and bonds are reacting to that," said Lou
Brien, a market strategist at DRW Trading in Chicago.
    Analysts attributed the selling to reduced confidence that
U.S. President Donald Trump's pro-growth policies, including
financial deregulation, would be implemented soon.
    Trump is facing opposition from lawmakers on his plan to
dismantle Obamacare, with any new fiscal stimulus likely to be
delayed as the administration prioritizes domestic issues
including healthcare.             
    Benchmark 10-year U.S. Treasuries             gained 11/32
in price to yield 2.43 percent, the lowest yield since March 1
and down from 2.50 percent earlier on Tuesday.
    Expectations of a less aggressive Federal Reserve than some
investors had expected added to bond gains on Tuesday.
    Yields have fallen since the U.S. central bank last
Wednesday raised interest rates, as expected. Some investors had
anticipated the Fed would also take a more hawkish tone on
future rate hikes on expectations of stronger growth.
    "They concentrated so much fire power toward the rate
decision that they created this atmosphere of urgency in the
minds of traders," said Jim Vogel, an interest rate strategist
at FTN Financial in Memphis Tennessee.
    However, "when they actually sat down they said 'we've got
to raise rates,' but they didn't display any urgency on any
other point," Vogel said.
    The Fed reiterated that future rate increases would be
"gradual." At the current pace, rates would not return to a
neutral level until the end of 2019.             
    Speeches by Fed officials are in focus this week for any new
indications about future interest rate policy.
    Fed Chair Janet Yellen is due to speak at a community
development conference on Thursday.
    The Federal Reserve sees an opportunity to remove some of
the monetary stimulus it has given the U.S. economy, Kansas City
Federal Reserve President Esther George said on Tuesday.
    Cleveland Fed President Loretta Mester and Boston Fed
President Eric Rosengren are scheduled to speak later on

 (Reporting by Karen Brettell; Editing by Richard Chang)


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