TREASURIES-US yields edge higher ahead of 30-year auction

WASHINGTON, Oct 9 (Reuters) - U.S. Treasury yields were rising on Thursday morning as the market awaited an auction of long-dated bonds amid a continuing shutdown of the federal government that has blocked the release of official economic indicators.

The two-year and benchmark 10-year Treasuries have moved in a narrow band since lawmakers in Washington failed to agree on spending legislation ahead of a September 30 deadline. So far, there are few indications an end to the impasse is near.

Sam Millette, fixed income strategist at Commonwealth Financial Network, said the lack of government data so far hadn't hurt the performance of Treasuries.

"It's kind of encouraging to see that things keep ticking along as we would expect them to," he said.

After auctions of three- and 10-year notes earlier in the week, Thursday afternoon's issuance of 30-year bonds would be another glimpse of investor appetite for U.S. sovereign debt, Millette added. The Treasury is also due to auction four- and eight-week bills on Thursday morning.

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB was last up 1.7 basis points at 4.148%. The yield on the 30-year bond US30YT=TWEB rose 1 basis point to 4.734%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 54.7 basis points.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, rose 1.7 basis points to 3.601%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.433% after closing at 2.428% on October 8.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.365%, indicating the market sees inflation averaging about 2.4% a year for the next decade.