May 8 (Reuters) -

U.S. Treasury yields held firm on Tuesday on optimism that

the Federal Reserve will lower rates more than once this year,

but investors had little incentive to trade ahead of important

inflation data next week.

New supply has been the theme in a week lacking in

market-moving economic reports. The Treasury will sell $42

billion in 10-year notes later in the day, after Tuesday's

well-received sale of 3-year Treasuries.

"It is a quiet week for data. There is no impetus to

push the 10-year one way or the other ahead of CPI next week,"

said Lou Brien, market strategist at DRW Trading in Chicago.

The yield on benchmark U.S. 10-year notes

rose 2.1 basis points from late Tuesday to 4.482%.

The 2-year note yield, which typically moves in

step with interest rate expectations, was down 0.2 basis points

to 4.8261%.

The U.S. Treasury yield curve spread between yields on two-

and 10-year Treasury notes, seen as an indicator of

economic expectations, was almost unchanged at a negative 34.7

basis points.

The 30-year bond yield was up 2 basis points at

4.6247%. The Treasury will sell $25 billion of 30-year bonds on

Thursday.

Yields fell sharply on Friday on news that the economy

created fewer than expected jobs in April. The report

accelerated a bond rally after the Federal Open Market Committee

said the recent uptick in inflation and economic growth were

unlikely to derail rate cuts this year. The Federal Reserve all

but ruled out rate hikes.

The 10-year yield hit its lowest since April 10 on Tuesday,

while on Friday the yield on the 2-year note fell to the lowest

since April 5.

The April Producer Price Index report comes on Tuesday, and

the closely followed CPI number next Wednesday, which will

provide insight on whether inflation has resumed its downward

trend toward the Fed's 2% target rate.

Fed speakers have a busy schedule this week. On Wednesday

Fed Vice Chair Philip Jefferson was due to speak before midday,

Boston Fed President Susan Collins at 11:45 a.m. EDT and Federal

Reserve Board Governor Lisa Cook at 1:30 p.m. EDT.

In the fed funds futures market, traders are pricing in a

66% chance the Fed will pivot in September with a 25 basis point

cut at that meeting, unchanged from Tuesday. The second cut is

priced for December.