NEW YORK, Sept 24 (Reuters) - U.S. Treasury long-dated

yields edged higher in choppy trading on Tuesday as risk

appetite improved after China introduced broad stimulus measures

to support its faltering economy, while solid housing data

boosted expectations the Federal Reserve may not have to cut

rates aggressively in this latest easing cycle.

U.S. yields on seven-year notes and 30-year bonds hit fresh

three-week highs, while the yield curve again hit its steepest

level since June 2022, touching that milestone for a fifth

consecutive session.

Yields on the shorter-dated maturities, however, drifted

lower as the bond market continued to price in more interest

rate cuts over the next year.

"It's a combination of factors contributing to higher yields

(on the long end). China had a little bit to do with it,

although the market was already selling off early," said Jim

Barnes, director of fixed income at Bryn Mawr Trust in Berwyn,

Pennsylvania.

China on Tuesday said it will cut the amount of cash that

banks must hold as reserves - known as reserve requirement

ratios (RRR) - by 50 basis points (bps). It will also reduce the

seven-day repo rate by 0.2 percentage point to 1.5%, while

interest rates on existing mortgages will also be reduced by 0.5

percentage point on average.

"Also some of the economic data here were not as bad as

expected," Barnes said. "And I think the market is also taking a

breather with yields retracing higher, kind of keeping that

trend post-FOMC (Federal Open Market Committee). The post-FOMC

digestion is still on a steeper yield curve path."

Treasury yields held their gains after data showing house

prices rose 0.1% on a month-on-month basis after being unchanged

in June. They increased 4.5% in the 12 months through July,

though that's the smallest rise since June 2023.

But yields came off on the long end after a report showing

U.S. consumer confidence unexpectedly fell in September. The

Conference Board's consumer confidence index dropped to 98.7

this month from an upwardly revised 105.6 in August. The decline

was the largest since August 2021. Economists polled by Reuters

had forecast the index rising to 104.0.

In late morning trading, the benchmark 10-year yield rose

1.1 bps to 3.749% after earlier hitting a three-week

high of 3.81% following the housing data.

U.S. 30-year yields were up 2.2 bps at 4.104%,

also hitting a three-week peak of 4.154% earlier in the session.

On the short end of the curve, however, U.S. two-year yields

slipped 1.9 bps to 3.557%.

The U.S. two-year/10-year yield curve, a gauge of investors'

economic outlook, meanwhile, saw its spread widen to as much as

20.2 bps, the steepest since June 2022. The curve

was last at positive 19 bps.

A steeper curve can mean one of two things, either more rate

cuts are on the way, or inflation could re-accelerate that could

prompt the Fed to pause cutting interest rates.

Since the Fed cut interest rates by 50 bps last Wednesday,

the curve has steepened by 15.1 bps and it was primarily a bear

steepener, a scenario in which longer rates are rising faster

than their shorter-term counterparts. That suggests inflation

could increase again down the road.

U.S. rate futures have priced in a 56.5% chance of another

super-sized rate cut of 50 bps at the November meeting, with a

43.5% odds of the more standard 25 easing.

Bond investors are now looking to the auction of $69-billion

in U.S. two-year notes later on Tuesday

The auction "will offer a timely test of the demand for the

most policy-sensitive coupon now that the Fed's normalization

campaign is officially underway," wrote BMO Capital in a

research note.