(Adds comments from Fed"s Powell, updates prices) By Karen Brettell NEW YORK, Nov 17 (Reuters) - U.S. Treasury yields fell on Tuesday as data showed U.S. retail sales increased less than expected in October, underscoring expectations that growth might slow this quarter. Retail sales rose 0.3% last month, below economists’ expectations of 0.5%. Spending has been restrained by spiraling COVID-19 infections and declining household income as millions of unemployed Americans lose government financial support. “This is the first sign that Q4 is going to be pretty weak,” said Tom Simons, a money market economist at Jefferies in New York. “The government failed to deliver on any kind of stimulus package...We’re starting to see the effect of inaction over the summer now.” Optimism over vaccines that claim to have a high success rate against COVID-19 has boosted risk sentiment in the past week, sending benchmark 10-year yields to eight-month highs. But the rollout of any vaccine will take time and the government is unlikely to launch new stimulus until at least next year. Benchmark 10-year yields fell three basis points to 0.872%, after reaching 0.975% last week. The yield curve between two-year and 10-year notes flattened three basis points to 70 basis points. Federal Reserve Chair Jerome Powell said on Tuesday it was not time to shut down emergency programs aimed at battling the economic fallout from the coronavirus pandemic, with cases again surging and the economy left with "a long way to go" to recover. The Fed is expected to shift more of its bond purchases to longer-dated debt if it views yields as rising too far, though Powell did not comment on this on Tuesday. On Monday, Fed Vice Chair Richard Clarida appeared to downplay speculation that the Fed will change its $120 billion program of monthly bond purchases as soon as December. He said he was not concerned by a recent small rise in U.S. Treasury bond yields, and that borrowing costs are still "very accommodative". The Treasury Department will sell $27 billion in 20-year bonds on Wednesday and $12 billion in 10-year Treasury Inflation-Protected Securities (TIPS) on Thursday. November 17 Tuesday 3:01PM New York / 2001 GMT Price US T BONDS DEC0 172-19/32 0-22/32 10YR TNotes DEC0 138-76/256 0-68/256 Price Current Net Yield % Change (bps) Three-month bills 0.085 0.0862 -0.003 Six-month bills 0.095 0.0964 -0.005 Two-year note 99-231/256 0.1752 -0.004 Three-year note 100-18/256 0.2264 -0.008 Five-year note 99-86/256 0.3856 -0.022 Seven-year note 99-32/256 0.6289 -0.030 10-year note 100-8/256 0.8717 -0.034 20-year bond 95-80/256 1.3975 -0.032 30-year bond 99-252/256 1.6257 -0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.00 spread U.S. 3-year dollar swap 7.50 -0.25 spread U.S. 5-year dollar swap 6.00 -0.25 spread U.S. 10-year dollar swap -0.50 -0.25 spread U.S. 30-year dollar swap -33.25 -0.50 spread (Reporting by Karen Brettell Editing by Mark Heinrich)