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TREASURIES-Two-year yields hit more than 18-month high with inflation data on deck

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(Adds auction results; Clarida, Bostic comments) By Chuck Mikolajczak NEW YORK, Oct 12 (Reuters) - Yields on the U.S. two-year Treasury note jumped to their highest level in more than 18 months on Tuesday, on concerns rising inflation may force the U.S. Federal Reserve to take action earlier than currently anticipated with a key report on consumer prices on Wednesday in focus. The yield on the 2-year was up 3.2 basis points to 0.350% after reaching as high as 0.36%, its highest level since March 25, 2020. Brent crude prices have climbed for more than five straight weeks, hitting a two-year high of $84.60 on Monday, as increasing demand and clogs in the supply chain have also contributed to rising prices in other commodities. Investors will closely monitor Wednesday's consumer price index (CPI) data for September, with expectations calling for a monthly rise of 0.3%. A $58 billion Treasury auction of three-year notes was generally regarded as soft by analysts, while an auction of $38 billion in 10-year notes was seen as well received. Atlanta Fed Bank President Raphael Bostic said on Tuesday that U.S. inflation is above the Federal Reserve's 2% inflation target and policymakers need to watch carefully to ensure that pandemic-induced pressures do not cause long-term inflation expectations to become unanchored, while Fed Vice Chair Richard Clarida said the central bank has all but met its employment goal to move ahead with trimming its bond buying program. While shorter-term yields climbed, yields on longer-dated Treasuries dipped and served to flatten the curve. "The big move in Treasuries today has been the flattening and it is just a little bit of nervousness about where that CPI number is going to come in tomorrow," said Don Ellenberger, senior portfolio manager at Federated Hermes. "If it comes in high then maybe the Fed is going to have to do what Bostic has been saying, they are going to have to hike rates a little bit faster, a little bit sooner than the market anticipates." 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 123.0 basis points after hitting a 3-1/2-month high of 129.7 on Friday. The yield on 10-year Treasury notes was down 2.1 basis points to 1.584%. The yield on the 30-year Treasury bond was down 5.2 basis points to 2.108%. October 12 Tuesday 2:44PM New York / 1844 GMT Price US T BONDS DEC1 158-17/32 1-2/32 10YR TNotes DEC1 131-28/256 0-68/256 Price Current Net Yield % Change (bps) Three-month bills 0.05 0.0507 0.000 Six-month bills 0.055 0.0558 -0.005 Two-year note 99-206/256 0.3499 0.032 Three-year note 99-78/256 0.6154 0.035 Five-year note 99-8/256 1.0759 0.028 Seven-year note 99-16/256 1.3917 0.005 10-year note 96-248/256 1.5838 -0.021 30-year bond 97-160/256 2.1076 -0.052 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 12.00 1.00 spread U.S. 3-year dollar swap 15.25 1.00 spread U.S. 5-year dollar swap 8.00 -0.50 spread U.S. 10-year dollar swap 1.75 -0.25 spread U.S. 30-year dollar swap -23.75 1.25 spread (Reporting by Chuck Mikolajczak; editing by Jonathan Oatis and Nick Zieminski)