TREASURIES-Yields flat as market digests Fed rate cut ahead of Powell remarks

By Matt Tracy

Sept 23 (Reuters) - U.S. Treasury yields on Tuesday were largely flat after inching higher in the previous session, as the market looks to remarks from Fed Chair Jerome Powell later in the day for signs of the central bank's next interest rate decision.

The benchmark U.S. 10-year Treasury note yield US10YT=TWEB hit its highest since September 5 in Monday afternoon trading and was last down 0.8 basis points (bps) at 4.137%.

The 30-year bond yield US30YT=TWEB, which gained for its fourth consecutive session on Monday, was last slightly down from Monday's close at 4.759%.

Yields rose last week despite the U.S. central bank's 25-basis-point rate cut and its signal for more easing at future meetings. They appear to have hit a quiet period this week as the market awaits further data for indications of the economy's direction and the chances of another rate cut or a rate pause at the Fed's October meeting.

Markets are pricing in a 92% chance of a 25 bp cut at the Fed's October meeting, and 8% odds of a pause. U.S. rate futures have also priced in 44 bps worth of cuts through the end of the year, according to LSEG data.

The two-year US2YT=RR yield, which typically reflects interest rate expectations, was last down 0.5 bps from Monday's close at 3.596%. It hit a three-week high of 3.6% in afternoon trading on Monday.

"Our base case is still a cut in October and December ... but I don’t think it’s going to be a done deal," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.

A closely watched part of the U.S. Treasury yield curve measuring the gap between two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was last at 53.2 bps.

New Trump-appointed Fed Governor Stephen Miran, the sole dissenter at last week's meeting in favor of steeper rate cuts, repeated his sentiments on Monday. In contrast, three Fed presidents all voiced caution around rate cuts in their own Monday remarks.

"So far, the hawks have been on parade ... there are still worries about inflation and potentially central bank independence," Gennadiy added.

Fed Chair Powell at noon (1600 GMT) is set to give his first public remarks on the U.S. economy since the Fed cut rates last week. Fed Governor Bowman and Atlanta Fed President Raphael Bostic will also give public remarks.

Economic data is sparse on Tuesday morning but will include S&P Global's flash U.S. services and manufacturing purchasing managers' index releases for September.

The Treasury Department is scheduled to auction $69 billion in two-year notes at 1pm (1700 GMT). It will auction a further $70 billion in five-year notes US5YT=RR and $44 billion in seven-year notes US7T=RR later in the week.