(Recasts, updates yields, adds Fed action)
    By Karen Pierog
    CHICAGO, Nov 3 (Reuters) - U.S. Treasury yields rose on
Wednesday after the Federal Reserve, as expected, said it will
commence tapering asset purchases this month, but stuck with its
contention that high inflation would be transitory.
     The benchmark 10-year yield, which fell to a
2-1/2-week low of 1.519% earlier in the session, climbed to a
session high of 1.602%. It was last up 4.9 basis points at
1.5963%. 
    The two-year yield, which hit a 19-month peak of
0.5640% last week, was last 3.6 basis points higher at 0.4916%.
    At the end of its two-day meeting on Wednesday, the Fed said
it will in November begin trimming its monthly $120 billion
purchases of Treasuries and mortgage-backed securities by $15
billion a month, with plans to end the program in 2022.
    
    John Canavan, lead analyst at Oxford Economics, said the
Fed's move was in line with expectations.
    "Since the knee-jerk response, curve steepening flows have
begun to dominate the price action in Treasuries. The
committee’s reiteration of their belief that the factors behind
elevated inflation are largely transitory was taken as
relatively dovish ahead of Fed Chair Powell’s press conference,
driving the steepeners," he said in an email.
    A closely watched part of the yield curve that measures the
gap between yields on two- and 10-year Treasury notes
 was last about a basis point steeper at 110.50
basis points.
      November 3 Wednesday 2:30PM New York / 1830 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.05         0.0507    0.000
 Six-month bills               0.07         0.071     -0.003
 Two-year note                 99-197/256   0.4916    0.036
 Three-year note               99-144/256   0.7755    0.053
 Five-year note                99-152/256   1.2091    0.060
 Seven-year note               99-100/256   1.4671    0.050
 10-year note                  96-224/256   1.5963    0.049
 20-year bond                  95-236/256   2.0006    0.031
 30-year bond                  100-44/256   1.9923    0.034
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        19.75        -0.25    
 spread                                               
 U.S. 3-year dollar swap        20.50        -0.75    
 spread                                               
 U.S. 5-year dollar swap         7.75        -0.75    
 spread                                               
 U.S. 10-year dollar swap        2.25        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -20.75         0.00    
 spread (Reporting by Karen Pierog in Chicago and Sujata Rao and Dhara
Ranasinghe in London; editing by Jonathan Oatis, Kirsten
Donovan)