NEW YORK, July 9 (Reuters) - Benchmark 10-year Treasury yields inched higher Tuesday ahead of closely-watched Senate testimony expected from Federal Reserve Chair Jerome Powell that may give additional clues as the pace of interest rate cuts later this year.

Futures markets are anticipating 50 basis points in expected interest rate cuts by the end of December, with the first cut coming in September, according to CME's FedWatch Tool. The strength of the US labor market, as well as continued progress on inflation, are the factors that the US central bank has cited as key to influencing the timing and pace of interest rate cuts.

The move higher in yields comes after benchmark 10-year Treasuries fell approximately 20 basis points last week after a string of weaker than expected economic data, including a disappointing read on ISM non-manufacturing activity and steep revisions in the number of non-farm payrolls jobs added over the last two months.

At the same time, increasing market expectations that former president Donald Trump will prevail in the November U.S. presidential election are prompting investors to question whether there could be another resurgence in inflation, said Charlie Ripley, Senior Investment Strategist for Allianz Investment Management.

"What's happening on the political front is becoming a bigger factor, but that could change with any headline coming out with Biden and his candidacy for the Democrats," he said.

The yield on the benchmark U.S. 10-year Treasury note rose 2.5 basis points to 4.294%. The yield on the 30-year bond rose 2 basis points to 4.478%.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 1.9 basis points to 4.637%.

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 negative 34.5 basis points.

The Treasury Department will auction $58 billion in 3-year notes later in the day.

(Reporting by David Randall, Editing by Nick Zieminski)