(Writes throughout with auction results, analyst quote, context)

By Tatiana Bautzer

NEW YORK, June 25 (Reuters) - Yields on benchmark U.S.

Treasuries were slightly lower on Wednesday afternoon, as oil

prices rose and markets assessed the timing of potential

interest rate cuts.

Yields on the longer-term Treasuries rose during the day,

but receded in afternoon trading. The U.S. 10-year Treasury

note's yield was down 0.6 basis point to 4.287%,

and the 30-year bond yield was flat at 4.831%

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

typically moves in step with interest rate expectations, was

down 1.1 basis point at 3.773%.

Oil prices rose on Wednesday after sharp declines over the

last days. Investors considered strong U.S. energy demand and

assessed the stability of the truce in the Middle East.

Federal Reserve Chair Jerome Powell

told a U.S. Senate panel on Wednesday

that tariff plans may well just cause a one-time jump in

prices, but the risk it could cause more persistent inflation is

large enough for the central bank to be careful in considering

further rate cuts. Debate over the timing for the first rate

cuts of the year has been growing since Fed officials appointed

by President Donald Trump, such as Michelle Bowman and

Christopher Waller, discussed the chance of rate cuts beginning

as soon as July.

"Our base case scenario is still the first rate cut of the

year in September, but we are closely following the discussions

among Fed officials ahead of the July meeting and Jackson Hole

Conference," said Ed Acton, Citigroup's U.S. rates strategist.

Several Fed officials are expected to speak publicly on

Thursday, such as Federal Reserve Bank of Richmond President

Thomas Barkin, Cleveland's Fed president Beth Hammack, board

governor Michael Barr and Minneapolis' Fed president Neel

Kashkari.

CME's FedWatch tool shows markets project a 22% chance of

the first rate cut at the July meeting and 90% chance of cuts in

September. Markets will be looking for signs of deceleration

that could skew the odds to more urgent timing.

On Thursday, the Commerce Department will release the final

estimate for first-quarter Gross Domestic Product. The Labor

Department will also release initial unemployment claims.

The most important data will come on Friday, with the Personal

Consumption Expenditure price index for May, said Gennadiy

Goldberg, head of U.S. rates strategy at TD Securities in New

York. "Markets do not have now a lot of momentum in either

direction right now, data may change that", he added.

Trump said on Wednesday morning during a NATO meeting in the

Netherlands he is already considering candidates to replace

Powell next year when his term ends.

The U.S. Treasury sold $70 billion in 5-year notes auction, with

tepid demand and a 2.36 bid-to-cover ratio. Yields on the 5-year

notes were flat in afternoon trading, at 3.842%.

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 51.4 basis points.

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

Inflation-Protected Securities (TIPS) was last at

2.307% after closing at 2.3% on June 24.

The U.S. dollar 5 years forward inflation-linked swap

, seen by some as a better gauge of inflation

expectations due to possible distortions caused by the Fed's

quantitative easing, was last at 2.471%.