* US Import Price Index rose 1.9% in May versus forecast of

1% rise

* Housing starts fell 15.4% in May, marking biggest decline

since March 2024

* Markets will test demand for long-term bonds at 20-year

reopening auction

By Tatiana Bautzer

NEW YORK, June 16 (Reuters) - Yields on U.S. Treasuries were

mixed on Tuesday following conflicting economic data as

investors looked ahead to this week's Federal Reserve policy

meeting, the first to be chaired by new U.S. central bank chief

Kevin Warsh.

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

was down 1.6 basis points at 4.453%. The two-year

U.S. Treasury yield, which typically moves in step

with short-term interest rate expectations, rose 0.4 basis

points to 4.068%.

U.S. import prices rose 1.9% in May, above the 1% forecast by

economists in a Reuters poll. The index was up 6.7% on a

year-over-year basis, the largest rise since August 2022. BMO

analysts said in a report on Tuesday that the rise in import

prices should add to upward pressure on the Personal Consumption

Expenditures Price Index excluding food and energy items in May.

There were also signs of some weakness in the U.S. economy, with

housing starts plummeting 15.4% in May, the largest decline

since March 2024.

The Fed is widely expected to leave interest rates unchanged at

the end of a two-day meeting on Wednesday, with markets focusing

on the language in its policy statement, the release of updated

policymaker projections and what Warsh, who took over from

former Fed chief Jerome Powell last month, says in his

post-meeting press conference.

"He'll try to say the least possible and have a much shorter

(press) conference than Powell used to have," said Tom di

Galoma, managing director of global rates trading at Mischler

Financial Group.

Markets are also watching developments around the preliminary

peace deal reached by the U.S. and Iran. It is still unclear

whether the conflict between Israel and the Iran-backed

Hezbollah movement in Lebanon will derail the peace effort, di

Galoma said. "Although the price of oil continues to slide, we

don't know if the conflict will be really over."

Demand for the long end of the Treasury yield curve will be

tested on Tuesday with the $13 billion reopening auction of

20-year notes.