(Updates yields, adds details on auction, analyst comments,

graphic)

By Davide Barbuscia

NEW YORK, June 26 (Reuters) - U.S. Treasury yields rose

on Wednesday amid a pick up in inflation in other countries,

fears of intervention from Japanese authorities to boost the

yen, and worries around liquidity at the end of the month.

Higher-than-expected inflation in Canada lifted U.S. yields

on Tuesday. On Wednesday it was the turn of Australia, where

consumer inflation accelerated to a six-month high in May

catching traders off-guard and prompting markets to raise the

chances of another interest rate hike this year.

Given the lack of significant U.S. economic data on the

calendar on Wednesday, yields were also drifting higher ahead of

government issuance of $70 billion in five-year notes, part of

$183 billion in total coupon debt sales by the Treasury this

week. Ultimately, however, the debt sale saw solid demand,

analysts said, with the Treasury issuing the paper at a high

yield of 4.331%, below the expected rate at the time of the bid

deadline, a sign that investors were willing to pay up.

"A lot of investors are trying to participate in

auctions because it's a way to get quite a bit of bonds on their

books without materially exposing themselves to liquidity

constraints," said Gennadiy Goldberg, head of US rates strategy

at TD Securities USA.

Five-year yields rallied after the auction,

although they still ended up adding nearly eight basis points on

the day to 4.339%.

In Japan, the yen dropped to its lowest level since 1986

against the dollar, sparking concerns there would be another

intervention from Japanese authorities to boost the currency.

"Markets are a little bit worried about Japan having to sell

Treasuries to intervene in the foreign exchange market, which

would push rates a little bit higher," said Goldberg.

Meanwhile, as the end of the month and the quarter

approaches, liquidity in money markets could become challenging

as dealers close their books, pressuring Treasuries.

"There's a bit of concern about what happens in repo

(repurchase agreements) heading into month end, may be some

pressures there," said Subadra Rajappa, head of US rates

strategy at Societe Generale.

On the monetary side, Fed officials reiterated this week

that more inflation data is needed for the central bank to move

to a less restrictive stance.

On Wednesday, traders of futures contracts tied to the

policy rate were betting on a total of 44 basis points in rate

cuts for 2024. Personal consumption expenditures inflation data

on Friday will be a key factor for investors to assess the

extent of any rate cuts this year.

Benchmark 10-year yields were up about eight

basis points to 4.316%% and 30-year yields added

seven points to 4.447%. Two-year yields, which tend

to more closely reflect monetary policy expectations, were

nearly two points higher at 4.749%.

The gap between two- and 10-year yields remained deeply

negative at about minus 43 basis points, but smaller than on

Tuesday, when it hit its widest since December at minus 51.6

basis points.

An inversion in that part of the yield curve, which occurs

when shorter-dated Treasuries yield more than longer-dated ones,

is closely watched by investors as it has historically signalled

a recession is coming.