(Adds data, 20-year auction results, quotes, updates prices) By Karen Brettell NEW YORK, Dec 21 (Reuters) - Longer-dated U.S. Treasury yields were little changed on Wednesday as investors waited on inflation data due on Friday for further clues about whether price pressures are continuing to moderate. Investors are pricing in a more dovish policy path than Federal Reserve officials have been signaling on optimism that inflation will continue to recede from its highest levels in decades. The market “is priced for an expectation that the Fed is not going to really deliver on what they told us”, said Thomas Simons, a money market economist at Jefferies in New York. If Friday’s personal consumption expenditures (PCE) data are higher than expected or consumer confidence data also due on Friday show that inflation expectations remain lofty that could be a concern for the U.S. central bank. Inflation expectations were “still at pretty elevated levels relative to where the Fed really needs them to be in order to get inflation down to 2%,” said Simons, adding that “it should hammer home the fact that when the Fed says they expect to keep rates higher for an extended period, they mean it.” Data on Wednesday showed that U.S. consumer confidence rose to an eight-month high in December and consumers' 12-month inflation expectations fell to 6.7%, the lowest since September 2021. Fed officials expect to hike rates above 5% in 2023 and Fed chair Jerome Powell said last week that recent signs of slowing inflation have not brought any confidence yet that the fight has been won. Fed funds futures traders, however, are pricing for rates to peak at around 4.85% in May, before declining back to 4.37% by year-end. Benchmark 10-year note yields were steady on the day at 3.684%. They jumped as high as 3.722% overnight after the Bank of Japan on Tuesday surprised markets by widening the band of its yield curve control, a shift that some analysts said could make U.S. Treasuries less attractive to Japanese investors on a foreign exchange hedged basis. However, “while this may be a test of domestic tolerance for higher rates, it is certainly not clear that this is the beginning of a trend," said Evan Rourke, Director, Portfolio Management at Parametric Portfolio Associates. "Japanese rates remain significantly lower than US rates and without clearer indication of a trend, it is unlikely that we will see a significant repatriation of capital,” he said. Two-year note yields fell 5 basis points to 4.215%. The yield curve inversion between two-year and 10-year notes retraced to minus 53 basis points. The Treasury Department sold $12 billion in 20-year bonds on Wednesday to solid demand. The debt sold at a high yield of 3.935%, around a basis point below where it had traded before the auction. The Treasury will sell $19 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. December 21 Wednesday 3:00PM New York / 2000 GMT Price Current Net Yield % Change (bps) Three-month bills 4.225 4.3299 -0.026 Six-month bills 4.5125 4.682 -0.027 Two-year note 100-134/256 4.2148 -0.051 Three-year note 100-6/256 3.9913 -0.031 Five-year note 100-112/256 3.7766 -0.007 Seven-year note 100-164/256 3.7689 0.000 10-year note 103-160/256 3.6842 0.000 20-year bond 100-240/256 3.9314 -0.004 30-year bond 104-148/256 3.744 0.008 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 31.25 1.00 spread U.S. 3-year dollar swap 14.00 0.75 spread U.S. 5-year dollar swap 4.25 0.50 spread U.S. 10-year dollar swap -4.00 1.50 spread U.S. 30-year dollar swap -42.50 2.00 spread (Reporting by Karen Brettell; Additional reporting by Davide BarbuscianL1N33B18F2; Editing by Jonathan Oatis)