TREASURIES-Yields fall as Powell says will "act as appropriate"

(Recasts with comments from Fed's Powell, adds quote, updates prices) * Fed's Powell says will act to sustain expansion * China unveils retaliatory tariffs * Traders see 100% chance of rate cut in September By Karen Brettell NEW YORK, Aug 23 (Reuters) - U.S. Treasury yields fell to session lows after Federal Reserve Chair Jerome Powell said that the U.S. economy is in a "favorable place" and the Federal Reserve will "act as appropriate" to keep the current economic expansion on track. Powell, under pressure from President Donald Trump to cut interest rates soon and deeply, listed a series of economic and geopolitical risks that the Fed is monitoring but said "the U.S. economy has continued to perform well overall." "Powell’s kind of sticking to the tone. It sounds very much like the (Fed) minutes, he’s presenting the same arguments," said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. "The one interesting point is he did talk about all the risks that have happened since the July meeting, and that suggests that he is allowing the markets to price in a September move," Goldberg added. The U.S. central bank last month cut rates by 25 basis points, but indicated further rate decreases may not be needed. The minutes of the July 30-31 meeting released on Wednesday show that policymakers were divided on cutting rates in July, and were united in wanting to avoid the appearance of being on the path to further rate cuts. But the bond market has priced in a far more bearish picture of the economy since the Fed’s July meeting. The two-year, 10-year yield curve inverted last week for the first time since 2007, a signal that a recession is likely in one to two years. The curve has traded in and out of inversion for the past three days. Interest rate futures traders are pricing in a 100% chance of a rate cut at the Fed’s September meeting, up from 96% before Powell's comments, according to the CME Group’s FedWatch tool. Powell’s comments came after China unveiled retaliatory tariffs against about $75 billion worth of U.S. goods, marking the latest escalation in a protracted trade dispute between the world's two largest economies. The latest salvo from China comes after the United States unveiled tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, scheduled to go into effect in two stages on Sept. 1 and Dec. 15. The escalating U.S.–China trade war is weighing on business sentiment even as investors are already worried about slowing international growth. Benchmark 10-year notes were last up 10/32 in price to yield 1.577%, down from 1.610% late on Thursday. The two-year, 10-year yield curve was last 0.80 of a basis point. (Editing by Bernadette Baum and Jonathan Oatis) )