By Chuck Mikolajczak

NEW YORK, July 1 (Reuters) - U.S. Treasury yields were higher on Wednesday to kick off July but retreated from earlier levels after a round of economic data and comments from Federal Reserve Chairman Kevin Warsh.

Speaking on a panel of central bankers in Sintra, Portugal, Warsh said inflation expectations and inflation risks have come down in recent weeks, even as he repeated the Fed is committed to bringing inflation down to its 2% goal and that his fellow U.S. policymakers will decide to raise interest rates when they begin their next meeting.

"Warsh said what he needed to say in terms of telling the market that he would be squarely focused on bringing inflation back down to target," said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors in Fairhope, Alabama.

"The other piece is the market may be responding that, hey, we have seen oil prices go down a lot, inflation break-evens have gone down a lot, if we do hike from here, it could be a bad decision."

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB rose 4.3 basis points to 4.465% after earlier hitting a high of 4.501% before Warsh spoke, its highest since June 24.

PRIVATE PAYROLLS MISS ESTIMATES

Yields had begun to pare gains after the ADP National Employment Report showed private employment rose by 98,000 jobs last month, below the 118,000 estimate of economists polled by Reuters, after an unrevised gain of 122,000 in May.

Investors will eye the key government payrolls data on Thursday for more clues on the health of the labor market. U.S. markets are closed on Friday for the Independence Day holiday on July 4.

The yield on the 30-year bond US30YT=TWEB climbed 5.9 basis points to 4.962%.

MANUFACTURING ACTIVITY SLOWS

A separate report from the Institute for Supply Management showed its manufacturing PMI slipped to 53.3 last month from 54.0 in May, above the 50 threshold that signals expansion but below the 54.0 estimate. The survey's prices paid for inputs measure dropped to a still-elevated 73.0 from 82.1 in May.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 31.1 basis points.

Several Fed officials had flagged concerns about inflation remaining elevated in recent days.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, edged up 1.1 basis points to 4.15% after hitting a one-week high of 4.1991% earlier in the day.

Expectations for a rate hike of at least 25 basis points at the Fed's July meeting dipped to 27.3%, down from 33.1% in the prior session, according to CME FedWatch, with markets now pricing in a 63.4% chance for a hike at the September meeting, down from 67.8% on Tuesday.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.285% after closing at 2.262% on June 30.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.249%, indicating the market sees inflation averaging about 2.2% a year for the next decade.