TREASURIES-Yields decline on hopes for lower tariffs and Fed easing

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Lower-than-feared tariffs seen as supportive

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Economic data shows resilience but cloudy outlook

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Fears of foreign buyers' strike partly assuaged

(Adds details, graphic, investor comments, auction results; updates market levels)

By Davide Barbuscia

NEW YORK, April 24 (Reuters) - U.S. Treasury yields declined on Thursday on tentative hopes of lower-than-feared U.S. tariffs and the possibility of an interest rate cut by the Federal Reserve in June.

The decline in yields, which move inversely to bond prices, consolidated Wednesday's bond market rally spurred by signals that U.S. President Donald Trump was open to reducing tariffs on China. Trump has also stepped back from his attacks on Fed Chairman Jerome Powell, which brought some relief.

On Thursday, Federal Reserve Bank of Cleveland President Beth Hammack called for patience on monetary policy given high levels of uncertainty, but she did not rule out a rate cut in June, depending on economic data.

"The market is reacting positively to that, given that recently we've heard a slew of Fed speakers taking a more cautious tone on easing, with a lack of clarity on the inflationary impact of tariffs," said Subadra Rajappa, head of U.S. rates strategy at Soci?t? G?n?rale.

"There's some optimism based on the comments from Trump on China tariffs, and how they could be lower, but the optimism is always tempered because there's a lot of back and forth on the headlines," she said.

Trump told reporters on Wednesday the U.S. would have a "fair deal" with China. The remarks followed comments he made on Tuesday that a deal to lower tariffs was possible.

Still, some traders said the Treasury market remained choppy and difficult to navigate.

Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management, said big orders had driven the Treasury market up and down on Wednesday, and uncertainty around the impact of volatile U.S. policy on markets remained high.

"The big picture is still so blurred that anything can emerge," he said.

Economic data on Thursday showed resilience in the U.S. economy, even though the prospect of lower growth due to U.S. trade policies clouded the outlook.

Jack McIntyre, portfolio manager for global fixed income at Brandywine Global Investment Management, said it was hard to extrapolate a clean read on the economy from recent data, as tariffs loom large on businesses.

The number of Americans filing applications for unemployment benefits rose marginally last week, suggesting the labor market remained solid. A separate report showed orders for durable goods jumped 9.2% last month after gaining 0.9% in February.

"Companies are front-running the tariffs, so these durable goods data aren't something to get excited about," said Jamie Cox, managing partner for Harris Financial Group, in a note. "The good news is that companies are protecting their earnings and margins, and investors will be happy about that," he added.

U.S. existing home sales fell more than expected in March, weighed down by higher borrowing costs, the National Association of Realtors said on Thursday.

"If foreign investors' concerns about their exposure to the U.S. economy deepen, mortgage rates and other long-term interest rates might stay high even if the economy enters a recession," Bill Adams, chief economist for Comerica Bank, said in a note.

"That would increase the tail risk of a painful housing correction."

Benchmark 10-year yields were last at 4.31%, about 8 basis points lower than on Wednesday. Two-year yield was down about 7 bps at 3.789%.

On Thursday, the Treasury Department sold $44 billion in seven-year notes, the last of this week's coupon debt issuance. A two-year auction on Tuesday was soft, while a five-year debt sale met good demand on Wednesday.

The seven-year paper was sold with a high yield of 4.123%, roughly in line with the market at the time of bidding. Still, some analysts said the auction was soft, with the bid-to-cover ratio, a measure of demand, lower than average.

Market concerns around a meaningful retreat of foreign buyers, however, were partly assuaged this week, as Treasury auction allocation data on Wednesday showed solid foreign demand for a 10-year auction earlier this month, when the bond market was selling off amid tariff-induced volatility.

"There is no evidence of an overseas buyers' strike at this stage," BMO Capital Markets analysts said in a note.

(Reporting by Davide Barbuscia; editing by Barbara Lewis and Richard Chang)