TREASURIES-US bonds dip, pare earlier gains on geopolitical caution

* Oil flows will not normalize anytime soon, analyst says

* US 2/10 yield curve bear steepens

* US-Iran talks could resume soon, officials say

By Gertrude Chavez-Dreyfuss

NEW YORK, April 15 (Reuters) - U.S. Treasuries slipped on Wednesday, reversing some of their recent gains but holding within narrow ranges, as investors remained cautious about developments in the Middle East, even as President Donald Trump said the conflict could end soon.

Trump said on Wednesday that the world should watch out for an "amazing two days", while U.S. forces imposing a blockade turned back vessels leaving Iranian ports.

U.S. and Iranian officials are expected to return to Pakistan for more talks and Vice President JD Vance, who led the U.S. delegation at negotiations that ended on Sunday without a breakthrough, said he felt positive about where things stood.

Will Compernolle, macro strategist at FHN Financial in Chicago, said all the talk about the resumption of U.S.-Iran negotiations was "better than escalation, but it still doesn't mean that global energy markets are going to normalize anytime soon".

"I think the market is also becoming pretty desensitized to some of these partially optimistic headlines. And as far as the Treasury market is concerned, the 10-year has stayed within very narrow ranges because until there's a concrete development, either with escalation or peace, there's no reason to reprice."

INFLATION EXPECTATIONS

In late morning trading, the benchmark 10-year yield, which moves inversely to the price, was up 2.9 basis points at 4.285% , while U.S. 30-year yields rose 2.3 bps to 4.891% .

On the shorter end of the curve, the two-year yield, which reflects interest-rate expectations, also slid, down 2.7 bps at 3.778%.

The U.S. yield curve slightly steepened on Wednesday, with the gap between two-year and 10-year yields at 50.4 bps , compared with 49.9 bps late on Tuesday.

The curve exhibited a bear steepening move, with long-term yields rising faster than those on the short end of the curve, which many analysts said was likely a reversal of the flattening trades of the last few days.

When the curve steepens, it suggests that inflation expectations are picking up and this is manifested with the long end of the curve. This has caused the rate futures market to effectively price out Federal Reserve easing in 2026, or factor in rate tightening next year.

U.S. rate futures showed about 9 basis points of a rate cut by the Fed this year, slightly up from 7 bps late on Tuesday, but down from 55 bps before the Iran war, according to LSEG estimates.

The rate futures likely took their cue from Wednesday's data even though it had little market impact as the numbers showed a slowing economy.

U.S. monthly import prices increased less than expected in March, though details still pointed to firming imported inflationary pressures amid the Middle East conflict.

Import prices rose 0.8% last month after a downwardly revised 0.9% gain in February, data showed.

In housing, U.S. homebuilder sentiment fell to a seven-month low in April, as the war with Iran led to higher prices for materials and mortgage rates as well as increased economic uncertainty, a survey showed on Wednesday.

The National Association of Home Builders/Wells Fargo Housing Market index dropped four points to 34 this month, the lowest since September 2025, and below the 50 break-even point for 24 straight months. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Alison Williams)