TOKYO, Nov 25 Reuters U.S. longterm Treasury yields sank to a more than sevenweek trough on Friday while the dollar dropped back toward recent lows against major peers as markets continued to digest dovish signals from the Federal Reserve.

Expectations of a less aggressive pace of U.S. monetary tightening from as soon as next month continued to support some stock markets in Asia, but Hong Kong39;s Hang Seng dropped as record COVID19 infections in China dimmed the outlook.

The 10year Treasury yield dipped to 3.65 in Tokyo trading, the lowest since Oct. 5, following Thursday39;s U.S. Thanksgiving holiday. The twoyear yield slipped to a oneweek bottom at 4.424.

The dollar index , which measures the greenback against the euro, yen and four other rivals, retreated 0.11 to 105.76, heading back toward Thursday39;s low of 105.62.

A substantial majority of Fed policymakers had agreed it would likely soon be appropriate to slow the pace of interest rate rises, minutes of their latest meeting showed on Wednesday.

Futures markets show investors now see U.S. rates peaking just above 5 around May, and are pricing in roughly twothirds odds that the Fed slows to a halfpoint hike on Dec. 14 from a string of 75basispoint increases.

More and more market participants are getting confident that the peak in longterm yields is past, and we are slowly moving toward a Fed pause, said Naka Matsuzawa, chief Japan macro strategist at Nomura in Tokyo.

U.S. SP 500 Emini futures pointed 0.25…