NEW YORK, Oct 27 (Reuters) - Yields on U.S. Treasuries

rose on Monday as hopes of a China and U.S. trade deal boosted

risk appetite and investors worried about U.S. economy data

availability and its effect on future interest rates.

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

was up 2.3 basis points in late morning trading,

at 4.02%. Bonds did not react as positively as equities to the

signs of progress in the talks. "It may be an effect of the

risk-on movement that reduces demand for safer assets, but also

the lack of data and also how it will affect the interest rate

trajectory", said Tom Di Galoma, managing director at Mischler

Financial Group.

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

typically moves in step with interest rate expectations for the

Fed, rose up to 3.2 basis points in the morning, but pared gains

to 2.8 basis points, at 3.512% after the Treasury auctioned $69

billion of these notes.

The large supply available, with another $70 billion auction

of 5-year notes, may also be a factor in rising yields, Galoma

added.

Investors see a 25-basis point rate cut in the Federal Open

Market Committee meeting on Wednesday as certain, specially

after the September CPI release on Friday. Data showed pressures

of import tariffs pass-throughs were so far weaker than

expected, BMO analysts led by Ian Lyngen said in a note to

clients on Monday.

The interest rate trajectory through December looks less

certain as the prevailing uncertainties won't be resolved in the

near-term, they added. Even if the government reopens in

November, the effect on data availability could extend well into

2026.

In this context, the U.S. consumer confidence data to be

released on Tuesday by the Conference board will be watched more

closely than usual. The yield on the 30-year bond

rose 0.5 basis points to 4.591%.

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 50.4 basis points.

The 10-year TIPS breakeven rate was last at

2.303%, indicating the market sees inflation averaging about

2.3% a year for the next decade.