NEW YORK, Aug 28 (Reuters) - U.S. Treasury yields were

little changed on Wednesday as investors awaited an auction

later in the day and gauged the Federal Reserve's plans for

interest rates.

Investors have completely priced in a rate cut from the Fed

of at least 25 basis points at its mid-September policy meeting,

with expectations for a 50-bps cut at 34.5%, up from 11.3% a

month ago, according to CME's FedWatch tool.

Yields have been declining as economic data has signaled a

softening economy and inflation has resumed cooling, leading Fed

Chair Jerome Powell to signal last week a shift in the central

bank's focus to supporting the labor market over combating

inflation.

"A lot of people are just kind of waiting for the September

meeting," said Tom di Galoma, managing director and head of

fixed income at Curvature Securities in Park City, Utah.

"The Fed is certainly ready to cut rates, I'm looking for 50

basis points in September. I'm probably an outlier, but the Fed

probably wants to make the first move a substantial one, they

want to probably get the economy going a little bit."

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 negative-3.4 bps after narrowing to a

negative-2.79 bps, its highest level since Aug. 8.

The narrower inversion suggested that the bond market is

pricing in the Fed's easing cycle.

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

fell 0.6 bps to 3.827%.

Trading activity was dampened ahead of Monday's U.S. Labor

Day holiday.

The yield on the 30-year bond fell 0.9 bps to

4.119%.

Treasury is scheduled to auction $70 billion in five-year

notes, which investors will eye for signs of demand

for debt. A July auction tailed by 1.1 bps, and the one-year

average tail is 0.3 bps, according to Deutsche Bank. The yield

was last flat at 3.653%.

A two-year note auction of $69 billion on Tuesday was solid,

with more supply coming on Thursday with $44 billion in

seven-year notes.

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

moves in step with interest-rate expectations,

fell 0.6 bps to 3.859%.

The break-even rate on five-year U.S. Treasury

Inflation-Protected Securities was last at 2.041%

after closing at 2.042% on Aug. 27.