TREASURIES-Yields keep declining as data barrage does little to change rate cut expectations?

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Economic data releases fail to alter Fed rate cut expectations

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Retail sales and PPI data show mixed economic signals

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Fed officials' comments support further easing, boosting rate cut probability

By Davide Barbuscia

NEW YORK, Nov 25 (Reuters) - U.S. Treasury yields kept declining on Tuesday amid a flurry of economic data releases that did little to dissuade investors about the likelihood of an interest rate cut by the Federal Reserve next month. Some of the economic data releases on deck on Tuesday, including retail sales and producer prices data for September, had been delayed by the 43-day government shutdown, leaving some investors skeptical about their reliability in providing a picture of U.S. economic health.

""There's no real trade here, because this September data is not going to change the picture much here," said Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management. U.S. retail sales rose 0.2% in September, slowing from August's unrevised 0.6% gain and coming in below economists' expectations for a 0.4% increase, the Commerce Department said on Tuesday.

Separately, the Labor Department reported that the Producer Price Index for final demand increased 0.3% in September, in line with forecasts, following an unrevised 0.1% decline in August. On a year-on-year basis, the PPI rose 2.7%, matching August's increase.

"It's not just that (the data) is old, it really wasn't much of a surprise to move the needle," said Jack Ablin, chief investment strategist at Cresset.

"In fact, in many respects, it confirmed what a lot of economists and investors suspect, and that is that spending is weakening but prices are still pretty persistent," he added.

Rates future traders were assigning an 83% probability to an interest rate cut by the Fed next month, in line with Monday and up from 50% a week ago, CME Group data showed on Tuesday.

The rate cut expectations gained consensus after comments from Fed officials in recent days favoring further easing by the central bank.

Also on Tuesday's economic calendar were the September U.S. Federal Housing Finance Agency home price index, the November Richmond Fed manufacturing index, August business inventories, October pending home sales, and the November consumer confidence index.

Yields, which did not move much after the release of these datapoints, were lower across the curve on the day.

Benchmark 10-year yields were last at 4.009%, about three basis points lower than on Monday, while two-year yields were last at 3.485%, about two basis points lower.

Later on Tuesday, the Treasury Department will sell $70 billion in five-year notes.

(Reporting by Davide Barbuscia, Editing by Nick Zieminski)