July 16 (Reuters) - Longer-dated U.S. Treasury yields

pared losses on Tuesday after better-than-expected U.S. retail

sales data for June.

The yields were lower on the day, however, as investors

balanced the likelihood of an impending Federal Reserve interest

rate cut against possibly inflationary policies if Donald Trump

wins the November U.S. presidential election.

Treasury yields have tumbled this month as softer jobs data

and easing inflation boost the odds of a September rate cut.

Traders are now pricing for two or possible three rate

reductions by December.

But, increasing odds of a Trump presidential victory and a

still strong economy is offsetting some of that pricing.

U.S. retail sales were unchanged in June, and the underlying

trend was strong, which could boost economic growth estimates

for the second quarter.

"The Fed has seen a lot more encouraging data, both on the

labor market and inflation side, which has allowed the market to

price in a somewhat more aggressive Fed easing cycle," said

Zachary Griffiths, senior investment grade strategist

at CreditSights in Charlotte, North Carolina.

However, Griffiths added, "you have to balance that with the

higher yield/steeper curve concern with a Trump victory and

retail sales maybe taking some wind out of the sails of the

lower growth, more disinflation, better balance in the labor

market trade."

Trump is seen as the candidate more likely to win the

election after surviving an assassination attempt on Saturday.

Online betting site PredictIt showed bets of an election win at

69 cents for Trump, up from Friday's 60 cents, with a victory

for Joe Biden at 24 cents.

Analysts have said that a Trump victory could lead to more

inflation due to potential policies including tax cuts and

tariffs.

Benchmark 10-year yields were last down 2 basis

points at 4.208% and two-year yields rose 2 basis

points to 4.47%.

The inversion in the closely watched two-year, 10-year

Treasury yield curve widened to minus 26 basis points after

reaching minus 22 basis points on Monday,, the

smallest inversion since January.

The gap between two-year and 30-year yields

was at minus 5 basis points, after turning positive on Monday

for the first time since January.