SYDNEY, June 28 (Reuters) - U.S. Treasury yields inched

higher on Friday as anxiety built before U.S. inflation data

that could make or break the case for a September rate cut,

while awaiting the full fallout from the U.S. presidential

debate.

Two-year yields crept up 2 basis points to

4.732%, barely changed on the week but down 16 basis points for

the month.

Yields on 10-year notes also rose 2 basis points

to 4.313%, 5 basis points higher for the week but still off 20

basis points for June so far.

Bonds had been aided by a batch of data pointing to a

cooling U.S. economy, leading the closely-watched Atlanta Fed's

GDPNow indicator to tick down to 2.7% from 3.0%.

Much now rests on the May price index for personal

consumption expenditures (PCE), one of the Federal Reserve's

favoured measures of inflation, which needs to slow as expected

to keep rate cuts on track.

Forecasts are that the core measure rose just 0.1% in May,

pulling the annual pace down to 2.6% and its lowest since March

2021. Estimates range from zero to 0.2%, though there are more

analysts tipping the latter than the former.

"So far in Q2, the incoming economic data are heralding a

resumption of disinflation and shift towards greater economic

balance," said analysts at ANZ in a note.

"If the June data continue to show moderation, that should

support an acknowledgement from the Fed that policy settings are

working."

Futures imply a 64% chance of a quarter-point rate

cut in September, compared with roughly 49% a month ago, and 45

basis points of easing this year.

The early take on the U.S. presidential debate was that

neither President Joe Biden or Republican former president

Donald Trump landed a knockout blow on his opponent, though

market odds narrowed slightly for a Trump win.

Analysts at JPMorgan noted Trump's team had proposed wide

scale tariffs on imports would lift prices, while restrictions

to immigration would put upward pressure on wages and extended

tax cuts would likely add to government debt.

"It could thus be argued that Trump's policies overall may

imply significant upside risks to inflation, inflation

expectations and Treasury issuance," wrote JPMorgan analyst

Nikolaos Panigirtzoglou in a note.

"As yet, markets do not appear to have yet priced in much

risk premium for the inflationary implications of the Trump

campaign's major policies."

Neither candidate has talked much about the ballooning

government debt and deficit, which the IMF on Thursday warned

was a major threat to the U.S. and global economy.

The Fund said higher taxes and cuts to spending were needed

to restrain general government debt, which was otherwise

expected to exceed 140 percent of GDP by 2032.

(Reporting by Wayne Cole; Editing by Lincoln Feast.)