As investors unwound the U.S. Treasury yield curve on Tuesday, Gertrude Chavez-Dreyfuss NEW YORK, Oct 19 Reuters - The U.S. Treasury yield curve widened on Tuesday, as investors unwound the flattening moves of the last few sessions after global central banks dampened expectations of near-term tightening that spilled over to the world's largest bond market. The steepening of the curve extended after weaker than expected U.S. housing data. U.S. Fed funds, which track short-term Fed Rate expectations, priced a 64% chance of rate hike in July next year, down from 82% on Monday. Fed tightening in August was up by 100% on Tuesday, down from 80% on Monday. The yield curve flattened amid hopes that Fed would tighten interest rates, pushing yields on the short end higher. The yield spread between the U.S. 5 year note and U.S. 30 year bond widened to 90 basis points on Tuesday, On Monday, the U.S. 5 year 30-year yield curve was at its flattest since late April 2020. The U.S. 5 Year Renewed Yield, which has come to reflect Fed rate hike expectations, has been on a tear the last two weeks, hitting its highest since February 2020 at 1.193%. The yield was the last to lower 1 basis point for 1.1488%. Analysts said that the rest of the global central banks' recent comments on Tuesday prompted some of the steepening moves. The bank of France Governor Francois Villeroy de Galhau, a member of the European Central Bank's policy-setting Governing Council, said on Tuesday that there is no need for the ECB to raise rates between now and 2022. Eurozone inflation is expected to fall below the 2% target of the ECB. Earlier in the session, the Reserve Bank of Australia said that in the minutes of its October policy meeting, the outbreak of the Delta variant of COVID 19 had interrupted the Australian economy's recovery. It reiterated its view of no hike in the 0.1% cash rate until 2024 given slow wages and inflation. Aside from the persistent central bank messages, U.S. housing starts unexpectedly fell in September amid persistent shortages of inputs and labor that are crimping the housing market and overall economic activity. U.S. starts dropped to 1.555 million units last month to a seasonally adjusted annual rate. The U.S. housing report briefly resumed long-dated yields, before they weighed gains. The housing sector, although on the upswing, has been recently stumbled, wrote Stan Shipley, fixed income strategist, at Evercore ISI in a report after the data. But they are still well above long-term demographic demand. Most forward-looking metrics on housing suggest it should turn up in Q 4 of 2021 and H 1 of 2022, he added. In U.S. 10 year trading, U.S. rates surpassed 3.4 basis points in late morning trading in 1.6161%. U.S. 30 year yields were also higher, more than six basis points of in 2.0711%.