* Fed leaves rates unchanged, bond-buying plan intact * Fed"s Powell says long way away from tapering bond buys * U.S. yield curve flattens * U.S. yields fall to three-week lows * Bonds look to small sector of stock market (Adds new comment, Fed"s Powell remarks, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 27 (Reuters) - U.S. Treasury yields fell on Wednesday after the Federal Reserve left interest rates unchanged and kept its bond-buying program intact, as widely expected, noting that the economic recovery has slowed in recent months. In his press briefing after the statement, Fed Chairman Jerome Powell balanced his downbeat near-term assessment of the economy with optimism about a likely recovery in the second half of the year as vaccines become more widely distributed. Powell said while the U.S. economy is still a long way away from a full recovery, he noted that there is good evidence to support expectations of stronger growth in the back half of 2021. "The market is digesting Powell"s comments and he just reiterated the Fed"s dovish stance," said Andy Richman, senior portfolio manager at Sterling Capital Management. "But rates have come down from the highs on the 10-year and we"re bumping up against the 1% mark. Given how much sell-off we"re seeing in equities today, Treasuries are not rallying that much here." Richman added that this goes back to whether investors think in the long term yields would go higher once the vaccine rollouts go widely. The Fed on Wednesday pledged again to keep its support for the U.S. economy, until there is a full rebound from the pandemic-triggered recession. Powell, in his briefing, also said the Fed is not tapering its bond purchases anytime soon. Yields across the curve dropped to three-week lows earlier in the session. That flattened the yield curve, an indicator of risk appetite, with the spread between two-year and 10-year notes hitting 88.40 basis points, the narrowest gap in three weeks. In late afternoon trading, the U.S. benchmark 10-year yield fell to 1.011%, from 1.04% late on Tuesday. It earlier fell to 1.001%, its lowest since Jan. 6. U.S. 30-year yields dropped to 1.771% from Tuesday"s 1.802%, after earlier sliding to a three-week low of 1.761%. At the front end, U.S. two-year yields were down at 0.119% , hitting a three-week low of 0.115% earlier. Bond investors are also looking at the stock market, in which small companies such as GameStop with the largest bearish bets against them have risen 60% on average so far this year, outperforming the rest of the market. "It just becomes potentially endemic and it"s like a virus," said Ellis Phifer, market strategist, at Raymond James in Memphis, Tennessee. "If it continues to spread, you get more margin calls, more firms having to potentially shut down and they"re leveraged so they start selling more and you can end up in a bad spot." The break-even inflation rate on 10-year TIPS, meanwhile, which measures expected annual inflation over the next decade, dropped below 2% for the first time since late December. It was last at 1.989%, down from Tuesday"s 2.004%. Analysts have been touting for weeks that the rally in breakeven rates are overdone and they are due for a pullback. January 27 Wednesday 4:16PM New York / 2116 GMT Price Current Net Yield % Change (bps) Three-month bills 0.07 0.071 -0.008 Six-month bills 0.08 0.0811 -0.003 Two-year note 100-3/256 0.1191 -0.006 Three-year note 99-216/256 0.1779 -0.005 Five-year note 99-214/256 0.4082 -0.019 Seven-year note 99-120/256 0.7037 -0.023 10-year note 98-192/256 1.0093 -0.031 20-year bond 96-156/256 1.575 -0.032 30-year bond 96-184/256 1.7671 -0.035 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 0.00 spread U.S. 3-year dollar swap 7.75 0.00 spread U.S. 5-year dollar swap 8.75 -1.00 spread U.S. 10-year dollar swap 3.50 0.25 spread U.S. 30-year dollar swap -24.75 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Sinead Carew; Editing by Kirsten Donovan, Steve Orlofsky and Andrea Ricci)