TREASURIES-US yields fall on signs of weaker housing market

By Tatiana Bautzer

NEW YORK, May 16 (Reuters) - Yields on U.S. Treasuries fell on Friday after data showed weaker housing starts than expected, as tariffs and high mortgage rates cooled activity in construction.

The benchmark 10-year yield US10YT=RR fell 6.1 basis points to 4.394%. The two-year US2YT=TWEB yield, which typically moves in step with interest rate expectations, fell 4.1 basis points to 3.932%.

U.S. single-family housing starts fell 2.1% on a seasonally adjusted basis in April as tariffs on imported materials and high mortgage rates remained obstacles for the housing market.

"Also the housing inventory seems to be increasing, so that may also be helping the market softness," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

Investors gave more importance to the deceleration of the housing market than to the unexpected rise in import prices last month, which may have influenced currency fluctuations.