TREASURIES-US longer yields rise slightly as markets consider rate cut signs, Middle East truce

By Tatiana Bautzer

NEW YORK, June 25 (Reuters) - Yields on longer-dated U.S. Treasuries were slightly up early on Wednesday as oil prices rose and the truce in the Middle East increased investors' willingness to take risks.

The yield on the benchmark U.S. 10-year Treasury note rose 3.7 basis points to 4.33%, and 30-year bond yields rose 4 basis points to 4.871%.

Oil prices rose on Wednesday after sharp declines over the last few sessions as investors assessed the stability of the cease fire between Israel and Iran.

Investors followed Fed's chair Jerome Powell testimony on Congress for potential signs of timing for the next interest rate cuts, after Fed officials appointed by president Donald Trump, such as Michelle Bowman, mentioned the possibility of cuts beginning as soon as July. "Markets are trying to assess the probability of shorter term rate cuts", said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.

Trump said on Wednesday morning during a NATO meeting in the Netherlands he is already considering candidates to replace Powell next year when his term ends. On Wednesday, Powell repeated he's open to the possibility that tariffs may have lower or higher impact on inflation than anticipated.

So far, markets are convinced the first interest rate cut will come in September, according to CME's FedWatch tool, that shows 20% chance of a 25 basis point cut in July and 85% probability of a 25 or 50 basis point cut in September.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was flat at 3.803%.

(Reporting by Tatiana Bautzer, Editing by Nick Zieminski)