(Updates as of 1415 ET)

NEW YORK, Aug 12 (Reuters) - U.S. Treasury yields

slipped on Monday as the market marked time for inflation data

later in the week that should be pivotal for Federal Reserve

policymakers to confirm if an easing at their September meeting

is warranted.

Japanese markets were closed on Monday and many U.S.

participants are taking August vacations. So, after the

gyrations of a week ago, there was scant motivation to trade

ahead of July producer price data on Tuesday and, especially,

the release of the Consumer Price Index on Wednesday.

After the Treasury rally over the last week and half during

which a breakout of fear about a recession pushed benchmark

yields to 14-month lows, investors are now looking to lock in

yields in case of a hard landing, said Robert Tipp, chief

Investment Strategist at PGIM Fixed Income in Newark, New

Jersey.

Most have not been impressed by soft landings during the

2000s and are thinking: "'We need to get in here and lock in the

long rates even though 200 basis points of cuts are priced in

because the next thing you know is its going to be further than

that'," Tipp said.

With inflation trending toward the Fed's 2% target and

recent payrolls data indicating labor market tightness is

abating, the futures market is pricing in at least a 25 basis

point ease from the current 5.25%-5.50% fed funds rate at the

next FOMC meeting in September, four quarter point cuts by the

end of 2024 and almost as many next year.

With no August Federal Open Market Committee meeting, it

leaves market players to hope Fed chair Jerome Powell signals

intentions at the Jackson Hole Economic Policy Symposium next

week.

Fed Governor Michelle Bowman softened her usually hawkish

tone ever so slightly on Saturday, noting some further "welcome"

progress on inflation in the last couple of months even as she

said inflation remains "uncomfortably above" the central bank's

target and subject to upside risks.

"The major catalyst this week is CPI on Wed. I would

describe it as 'checking the box' ahead of a probable September

rate cut," said Guy LeBas, chief fixed income strategist at

Janney Montgomery Scott in Philadelphia.

"As long as the CPI report isn't tragic, I don't think there

is a lot of ultimate market import in it."

LeBas added that a few corporate bond deals on Monday were

keeping light pressure on interest rates.

Benchmark 10-year note yields were off 3.8 basis

points at 3.904%. They rose 15-basis points last week, the

largest one-week increase since April, after recovering from

last Monday's sharp sell-off to the lowest since June 2023.

Yields on two-year notes, which typically move in

step with interest rate expectations, fell 4.4 bp to 4.0089%

having also posted the biggest one-week increase since March

after a drop to the lowest level since May 2023.

The yield curve between two- and 10-year Treasury notes

steepened 1.2 basis points to minus 10.7 basis

points. It steepened to 1.50 basis points a week ago, briefly

turning positive for the first time since July 2022.

The breakeven inflation rate on five-year TIPS

was 1.9837%, suggesting investors see inflation

averaging under 2% over the next five years. The five-year TIPS

BEI, fell below 2% on Aug. 2 for the first time since early

2021. The 10-year BEI was 2.1153%.

TIPS 'real' yields fell to 1.77% and 1.797% on the five-

and 10-year, respectively.

TD Securities said in a note on Monday that real yields

look attractive as BEI are too low.

"We look for the Fed to start easing in September,

pushing both nominal and real rates lower. However, we expect

rates to drift higher in the near-term," the firm said on

Monday.