LUBBOCK, Texas (Reuters) - Low yields in financial markets are a warning on the U.S. economy and so the Federal Reserve should be "very patient and judicious" as it considers whether to raise interest rates, Dallas Fed President Robert Kaplan said on Thursday.


"There is no doubt that as the (yield) curve gets flatter and inverted, that is a sign of economic trouble," Kaplan, a voter on Fed policy this year, said of the 10-year Treasury yield at 2.2 percent. "I'm sensitive to that fact ... and I think we need to be very patient and judicious in the next moves on the fed funds rate. That's what it tells me."


"We have to be careful in our further moves" on policy, he added at a Lubbock Chamber of Commerce luncheon.


(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama)