TREASURIES-US yields advance after data, before Fed meeting

* U.S. employment cost index rises in Q1

* Case-Shiller index of home prices rises in February

* U.S. consumer confidence, Chicago PMI fall

* U.S. two-year yields hit highest since November

NEW YORK, April 30 (Reuters) - U.S. Treasury yields climbed on Tuesday after data showed labor costs increased more than expected in the first quarter, boosted by the rise in wages and benefits, reinforcing expectations that the Federal Reserve will delay the start of its easing cycle to later in the year.

In afternoon trading, the benchmark 10-year yield rose 7.8 basis points (bps) to 4.69%. For the month, the 10-year yields was up 49.6 bps, its largest monthly gain since September 2022.

The yield on the 30-year Treasury bond was up 5.3 bps at 4.767%. On the month, 30-year yields rose 45.4 bps, the biggest monthly rise since September 2023.

On the short end of the curve, the two-year U.S. Treasury yield, which typically reflects interest rate expectations, rose to hit its highest since November at 5.045%. The yield was last up 6.8 bps at 5.0413%. On a monthly basis, it rose 42.1 bps, the most since June 2023.

Data showed that the Employment Cost Index (ECI), the broadest measure of labor costs, increased 1.2% last quarter after rising by an unrevised 0.9% in the fourth quarter.

The report came just before a two-day Fed policy meeting, in which the central bank is widely expected to hold interest rates unchanged at the 5.25% to 5.50% range.

Bond investors are expecting Fed Chair Jerome Powell to sound hawkish in his press conference, likely noting that the central bank is no rush to cut interest rates given persistent inflation and a still-robust labor market.

"I feel like the Fed is really between a rock and a hard place because the bar to hike further is really high, (which) would put ... more pressure on government coffers and their ability to pay that high interest expense," said Ayako Yoshioka, senior portfolio manager, at Wealth Enhancement Group.

"At the same time inflation is just crazy. So I think their preference is to just stay at the (current) level, but the inaction is going to frustrate the markets."

Other economic reports were mixed.

The Case-Shiller 20-City index of home prices rose 0.61% in February, which equates to a strong 7.6% annualized increase, much higher-than-consensus expectations. Both the ECI and Case-Shiller data will not be welcome by the Fed as it tries to slow the economy.

The Chicago PMI, a barometer of business activity in the U.S. Midwest, and U.S. consumer confidence, on the other hand, undershot expectations. The PMI dropped to a 17-month low of 37.9 from 41.4 in March.

U.S. consumer confidence fell in April to 97, its lowest in more than 1-1/2 years, a survey showed on Tuesday. The weak data had little impact, however, on the rates market.

Post-data, U.S. rate futures have priced in a 77% chance of a rate cut in December, down from 90% a week ago, according the CME's FedWatch tool. The market has also priced in just 31 bps of easing this year, equivalent to one rate cut by the Fed, compared with six at the beginning of the year.

Bond investors focused on any possible Fed announcement on a slowing of the balance sheet runoff, under the quantitative tightening program in which the Fed allows up to $95 billion a month of Treasuries and mortgage bonds to mature from the central bank's portfolio and not be replaced.

The expectation is for the Fed to announce a QT slowdown by June, but the Fed could flag signs of its plan for its balance sheet.

"The market largely expects QT to be tapered relatively soon, but if the Fed lays out the roadmap for QT tapering, the market would likely react positively and rates would go lower," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.

"Less QT means that the Treasury's funding needs decline modestly. We believe the impact will be felt across the curve, but the nominal increase in auction sizes was largest in the 2-5 year part of the curve, so there could be more relief felt there." (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Davide Barbuscia; Editing by Nick Zieminski and Cynthia Osterman)