By Sunny Oh

Chicago Fed President expects "one to two" hikes this year

Treasury prices gained some ground, sending yields lower, on Wednesday after U.K. Prime Minister Theresa May began the Article 50 process, formally beginning the process of leaving the European Union.

The yield on the 10-year Treasury note slipped 2.7 basis points to 2.393%. The yield on the 30-year Treasury bond fell 2.7 basis points to 2.997%. The yield on the 2-year Treasury note fell 3.2 basis points to 1.274%.

Bond prices move inversely with yields and one basis point is equal to a hundredth of a percentage point.

"The 10-year note yield has backed off from levels that suggest a breakout above the 2.60% is not likely to happen anytime soon." wrote Peter Cardillo, chief market economist for First Standard Financial, in a note, predicting Treasury yields were unlikely to follow through on the rise seen Tuesday.

"In fact, with the formal request by Great Britain to exit the EU this week, coupled with the upcoming French elections, yields may be poised to hang around the present levels," he said.

See:Brexit: Here's what happens now that the U.K. has triggered Article 50 (http://www.marketwatch.com/story/brexit-heres-what-happens-now-that-the-uk-has-triggered-article-50-2017-03-29)

On Tuesday, positive economic data took yields up as better-than-expected readings from the consumer confidence index heightened demand for risky assets and sapped demand for safe government paper. But after Theresa May formally signaled the beginning of Brexit negotiations by invoking Article 50 of the Lisbon Treaty, a decision that was widely anticipated, investors flocked back to haven assets as one source of geopolitical uncertainty in Europe is now concluded.

Opinion:Three ways today's triggering of Brexit will change Britain and Europe (http://www.marketwatch.com/story/three-ways-article-50-will-change-britain-and-europe-2017-03-29)

Chicago Federal Reserve President Charles Evans, who is a voting member of the central bank's interest-rate-setting committee, said he expects "one or two" more interest rate increases this year. Evans added an inflation rate of 2.5% "for a time" would not be out of keeping with the Fed's plans.

Treasury yields remained lower despite Boston Fed President Eric Rosengren saying he saw three more interest rate hikes this year, even if he would prefer the Fed to raise rates four times in 2017. San Francisco Fed President John Williams issued similar comments, saying he also expected three to four more hikes this year.

Auctions for $28 Billion worth of 7-year notes sold well, with the ratio of bids awarded to bids received peaking above 2, a level of activity largely considered by traders as healthy.

(END) Dow Jones Newswires

March 29, 2017 14:25 ET (18:25 GMT)