TREASURIES-U.S. Treasuries little changed after jobless claims data

    (Adds U.S. market open)
    By Herbert Lash
    NEW YORK, July 22 (Reuters) - U.S. Treasuries traded little
changed on Thursday prior to an auction later in the session of
$16 billion in 10-year TIPS after the latest weekly jobless
claims report reinforced expectations the Federal Reserve's
policy stance will remain dovish.
    The yield on 10-year Treasury notes fell 2 basis
points to 1.262%.
    The yield on the 30-year Treasury bond slid 1.9
basis points to 1.911%.
    The number of Americans filing new claims for jobless
benefits rose to a two-month high last week, the Labor
Department said in a report that nevertheless showed more people
are returning to work.
    Initial claims for state unemployment benefits increased by
51,000 to a seasonally adjusted 419,000 for the week ended July
17, the highest level since mid-May. Economists polled by
Reuters had forecast 350,000 applications for the latest week.
    After several weeks of sharp volatility, the market is
settling into a period of equilibrium, said Ben Jeffery, rate
strategist at BMO Capital Markets in New York.
    "Trading volumes today are meaningfully lower than they have
been all week," he said. "Positions are in the process of
starting to be set ahead of next week's Fed meeting, so we're
expecting a little bit of sideways into Wednesday."
    The 10-year U.S. Treasury will likely trade in a range of
1.25% to 1.3%, Jeffery said.
    Yields on the benchmark note plunged almost 30 basis points
to a low of 1.128% early on Tuesday from July 13, when data for
June showed the biggest jump in U.S. consumer prices in 13
years. Yields have rebounded about 14 basis points since then.
    The Treasury auction of 10-year Treasury Inflation-Protected
Securities at 1 p.m. ET (1700 GMT) should be well-received, but
has the potential of being the lowest-yielding 10-year TIPS
auction on record, Jeffery said.
    "It will offer an interesting glimpse at people's
expectations of inflation and how committed (Fed Chair Jerome)
Powell will be to a dovish stance next week," he said.
    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 106.0 basis points.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 0.8
basis points at 0.200%.
    The breakeven rate on five-year U.S. TIPS was
last at 2.458%.
    The 10-year TIPS breakeven rate was last at
2.273%, indicating the market sees inflation averaging just
under 2.3% a year for the next decade.

  July 22 Thursday 10:57AM New York / 1457 GMT
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.05         0.0507    0.000
 Six-month bills               0.05         0.0507    0.000
 Two-year note                 99-218/256   0.2018    -0.006
 Three-year note               100-2/256    0.3724    -0.016
 Five-year note                100-206/256  0.7088    -0.022
 Seven-year note               101-148/256  1.0138    -0.021
 10-year note                  103-88/256   1.2616    -0.020
 20-year bond                  106-232/256  1.8327    -0.018
 30-year bond                  110-128/256  1.9113    -0.019

   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        10.75         0.75
 spread
 U.S. 5-year dollar swap         8.50         1.00
 spread
 U.S. 10-year dollar swap        0.25         1.00
 spread
 U.S. 30-year dollar swap      -27.25         1.50
 spread


 (Reporting by Herbert Lash; Editing by Dan Grebler)

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