TREASURIES-US yields climb to multi-week peaks after weak Treasury auctions

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U.S. 2-year, 5-year, 10-year yields hit highest since early May

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U.S. yield curve less inverted

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U.S. two-year, five-year note auctions show soft results

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Fed funds futures price in one cut in 2024

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U.S. consumer confidence rebounds

(Adds comment, results of two-year, five-year note auction, bullets, graphic; updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, May 28 (Reuters) - U.S. Treasury yields ascended to multi-week highs on Tuesday in choppy trading as two lackluster debt auctions raised doubts about demand for U.S. government debt.

Investors also digested a mixed batch of data that speaks to the uncertainty surrounding the pace and timing of the Federal Reserve's easing cycle, widely viewed to start this year.

The bond market faced massive supply on Tuesday as well, with the auction of $69 billion in new U.S. two-year notes and $70 billion in five-year Treasuries. In total, the Treasury sold $297 billion in bills and notes on Tuesday.

For the week, the Treasury's total auction volume was more than $600 billion.

"With $297 billion in nominal supply on Tuesday between coupons and bills, I think some indigestion is to be expected," said Tom Simons, U.S. economist, at Jefferies in New York.

"I saw a headline that says no one wanted these Treasuries because of weak auction demand statistics. But at the end of the day, yields are still below overnight rates and the auctions generated still large bid-to-covers. They were not the best, but certainly we're far off from concerns that demand is too weak."

Data showed that Treasury's two-year auction was not well-received, with the two-year yield hitting its highest since the first week of May after the sale. The high yield for the offering was 4.917%, higher than the expected rate at the bid deadline, suggesting buyers demanded a premium to take down the note.

The two-year note's bid-to-cover ratio, a gauge of demand,

was 2.41

, lower than the 2.66 posted in April and the 2.70 average.

The five-year note auction, meanwhile, posted roughly the same soft results. The

high yield was 4.553%

, higher than expected, with the Treasury offering a more attractive rate to lure buyers. Its bid-to-cover was 2.30, lower than the 2.47 seen in the previous sale. It was the weakest bid-to-cover since Sept. 2022.

In afternoon trading, the benchmark U.S. 10-year yield rose 6.5 basis points (bps) to 4.538%. Earlier it advanced to 4.546%, the highest since May 3rd.

U.S. 30-year yields gained 7.5 bps to 4.652% , after earlier rising to a 10-day peak of 4.66%.

On the front end, the U.S. two-year yield, which reflects rate move expectations, was up 1.9 bps at 4.972%. The yield climbed to a roughly four-week peak of 4.981%.

Those on five-year notes rose 5.6 bps to 4.587% . The yield touched 4.594% after the auction, the strongest level since May 2nd.

Treasury yields initially slipped after a government report earlier in the session showed U.S. house price growth slowed sharply in March, as rising mortgage rates pressured consumer demand.

Prices edged up 0.1% in March after surging by an unrevised 1.2% in February, the Federal Housing Finance Agency said in its monthly report on home prices.

U.S. longer-dated yields, however, turned higher, while those on the short-end trimmed their losses after a consumer confidence report showed unexpected improvement in May, after worsening for three consecutive months.

The Conference Board said its consumer confidence index increased to 102.0 this month from an upwardly revised 97.5 in April. Economists polled by Reuters had forecast the index slipping to 95.9 from the previously reported 97.0.

"The market is looking for data that either shows the economy or inflation is slowing," said Stan Shipley, managing director and fixed income strategist at Evercore ISI in New York.

"Right now, there are no clear signs of that. So we're in this holding pattern until something breaks: either the economy or inflation slows further, or we're here with 3% growth and 3% inflation."

The U.S. yield curve, meanwhile, steepened or reduced its inversion on Tuesday. The spread between U.S. two- and -10 year yields, which historically has predicted eight of the last nine recessions, was at 43.8 bps, compared with 48.3 bps last on Friday. The curve on Friday hit its most inverted level since March 12 in the wake of stronger-than-expected U.S. data.

Following the housing data and the U.S. consumer confidence report, U.S. interest rate futures priced in one rate cut of 25 bps in 2024, possibly starting in November, according to LSEG's rate probability app.

(Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis and Nick Zieminski)