TREASURIES-US yields climb after data lifts bets on easing pause

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US retail sales rise more than expected

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US import prices advance unexpectedly

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US yield curve steepens

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US 10-year yield hits highest since late May

(Adds analyst comment, byline, bullets, Fed rate cut odds, yield curve; updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, Nov 15 (Reuters) - U.S. Treasury yields gained on Friday after data showed retail sales in the world's largest economy rose more than expected last month, while import prices increased, raising bets that the Federal Reserve could pause cutting interest rates at next month's policy meeting.

The benchmark 10-year yield advanced 4.9 basis points to 4.469%, following the economic numbers. It hit 4.505% earlier in the session, a 5-1/2-month high.

U.S. two-year yields, which reflect interest rate expectations, climbed 6.6 bps to 4.360%, rising to 4.379% earlier, the strongest level since late July.

Data showed U.S. retail sales rose 0.4% last month after an upwardly revised 0.8% advance in September. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, climbing 0.3%.

U.S. import prices, on the other hand, unexpectedly increased in October due in part to higher prices for fuels and other goods, suggesting inflation has stalled. Import prices were up 0.3% last month after an unrevised 0.4% decline in September.

Economists polled by Reuters had forecast import prices, which exclude tariffs, slipping 0.1%. In the 12 months through October, import prices increased 0.8% after dipping 0.1% in September.

Data on import prices followed gains in both consumer and producer prices earlier this week, suggesting that inflation remains sticky even with the Fed in the middle of an easing cycle.

"The data this week has not been favorable for inflation cooling. And we have been in the inflation-cooling camp for a long time," said Stan Shipley, fixed income strategist, at Evercore ISI in New York.

"But the Fed will wait and see until after the employment report on December 6 and then the CPI (consumer price index) report after. We will likely get a strong jobs report for November, some of that is a snapback from the hurricanes."

U.S. rate futures have reduced the odds of a 25-bp rate cut at next month's policy meeting to 55% from 61% before the retail sales and import prices data, according to LSEG calculations. It was at 63.2% late on Thursday.

The chances of a pause in rate cuts, on the other hand, increased to 45% from 39% before the reports. For 2025, futures have implied another 44 bps in rate reductions, down from 47 bps in the previous session.

In other maturities, U.S. 30-year yields firmed 6.3 bps to 4.644%.

The U.S. yield curve steepened after Friday's data, with the gap between two-year and 10-year yields at 12 bps , up from 8.6 bps on Thursday. The gap was 19.5 bps on Nov. 6, a day after the election.

The steepening of the curve suggested that the market is still pricing in rate cuts next month and some in 2025, with yields on the short end under control. (Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis)