TREASURIES-US yields slightly lower after data, tariff decision awaited

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Producer prices rise moderately in November

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November retail sales top expectations

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Geopolitical tensions in Middle East spur investor caution

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Supreme Court ruling on Trump's tariffs awaited

By Chuck Mikolajczak

NEW YORK, Jan 14 (Reuters) - U.S. Treasury yields edged lower on Wednesday after readings on the health of the consumer and inflation, while markets awaited a ruling from the Supreme Court on the legality of President Donald Trump's tariffs and geopolitical tensions ?flared in the Middle East. The Commerce Department said retail sales rose 0.6% in November, topping expectations of economists polled by Reuters calling for a 0.4% increase, ?after a downwardly revised 0.1% drop in October. Separately, the Labor Department said the Producer Price Index (PPI) for final ?demand rose 0.2% in November, matching the estimate of economists polled by Reuters, after ?edging up 0.1% in October.

Both reports ?were delayed due to the 43-day government shutdown.

"The economic data, on one hand, is a little bit dated, on the other hand, at the margin, ?it might have been like the PPI services number was pretty ?soft, so it may have been helpful," said Thomas Urano, co-chief investment officer at Sage Advisory in Austin.

"On the other hand, what's supporting the bond market here is a lot of geopolitical ?tension going on, a little bit of consolidation in the ?equity market, so ?it can put a short-term bid in the Treasuries, which is what we're seeing, but at the end of the day I don't think the Treasury market has a lot of direction at the moment." The ?yield on the benchmark U.S. 10-year Treasury note slipped 0.9 basis points to 4.162%. The United States is withdrawing some personnel from bases in the Middle East, a U.S. official said on Wednesday, after a senior Iranian official said Tehran had warned neighbours it would hit American bases if Washington strikes as Iran's leadership tries to put down the worst domestic unrest the Islamic Republic has faced. The yield on the 30-year bond edged down 0.7 basis points to 4.821%. Markets ?will also continue ?to wait on the Supreme Court to issue a ruling on Trump's sweeping tariffs as the Court did not announce a decision about the subject on Wednesday.

A closely watched part of the U.S. ?Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 63.4 basis points.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 0.2 basis points to 3.526%.

Markets have largely ruled out any chance of a rate cut at the Federal Reserve's meeting later this month, pricing in only a 5% chance, while expectations for a cut of at least 25 basis points at the central bank's ?March meeting are at 27.3%, according to CME's FedWatch Tool, roughly even with the 27.1% odds in the prior session.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.38%, its highest since mid-November, after closing at 2.367% on Tuesday.

The 10-year TIPS breakeven rate was last at 2.307%, indicating ?the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak, Editing by Nick Zieminski)