NEW YORK, Sept 16 (Reuters) - U.S. Treasury yields

slipped on Tuesday in a choppy session, retreating from earlier

highs after a flurry of economic data, including a gauge of

retail sales as investors awaited a policy statement from the

Federal Reserve.

Yields briefly extended gains after the Commerce Department said

retail sales rose 0.6% last month, above the estimate of

economists polled by Reuters calling for a rise of 0.2% and

after an upwardly revised 0.6% advance in July, indicating the

consumer remains willing to spend.

"There's this undercurrent of hope out there and it might

even be misplaced ... where people are thinking maybe we'll get

50 (basis points) tomorrow and maybe the Fed's going to be

incrementally more dovish than we think, and oh wait, there's

some retail sales, the economy is still pretty good," said Jason

Ware, chief investment officer at Albion Financial Group in Salt

Lake City, Utah.

"To me as an investor, that's what I want to see. I want to

see a Fed that is lowering rates in a measured way because they

can afford to as opposed to having to cut 50 because they have

to."

Other data from the Labor Department showed import prices

increased 0.3% last month, topping expectations calling for a

decline of 0.1%, after a downwardly revised 0.2% rebound in

July, hinting that domestic inflation could heat up in the

coming months.

The yield on the benchmark U.S. 10-year Treasury note

fell 0.4 basis point to 4.03% after rising to a

session high of 4.064% after the data.

The Fed will make its policy announcement on Wednesday, and the

market has fully priced in a rate cut of at least 25 basis

points, with a roughly 4% chance for an outsized 50 basis-point

cut, according to CME's FedWatch Tool.

A federal appeals court in Washington said on Monday that

Governor Lisa Cook could remain in her job while litigation over

President Donald Trump's effort to fire her proceeds. Also, the

U.S. Senate confirmed Stephen Miran, currently on leave as the

head of the White House's Council of Economic Advisers, to an

open seat on the central bank's seven-member Board of Governors

as Trump attempts to reshape the composition of the Fed.

The yield on the 30-year bond rose 0.4 basis

point to 4.659%.

More supply will come to the market later on Tuesday when

Treasury auctions $13 billion in 20-year bonds.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 51.8 basis points.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations for the

Fed, fell 2.5 basis points to 3.51% after earlier climbing to

3.578%.

The breakeven rate on five-year U.S. Treasury

Inflation-Protected Securities was last at 2.45%

after closing at 2.443% on Monday

The 10-year TIPS breakeven rate was last at

2.371%, indicating the market sees inflation averaging about

2.4% a year for the next decade.