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TREASURIES-Nominal U.S. yields little changed as inflation remains in focus

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(Adds results of 52-week auction, fresh prices) By Herbert Lash NEW YORK, May 18 (Reuters) - Nominal U.S. Treasury yields remained little changed on Tuesday but strong consumer demand as seen in Walmart Inc and Home Depot Inc results provided fodder for investors who take issue with the Federal Reserve's narrative of transient inflation. The yield on 10-year Treasury notes was up 0.9 basis points at 1.649%, below a spike above 1.75% reached in late March. But breakeven rates rose, the difference in yield between inflation protected securities and nominal debt. "The market is pushing back on the Fed's narrative that inflation is actually transient," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale. "Clearly you're seeing the inflation expectations being priced into breakevens." Trying to judge inflation concerns by looking at nominal yields is difficult in an environment where the Fed is buying a lot of securities, Rajappa said. The Treasury sold $34 billion in 52-week notes at a new record low of 0.055%, down from a previous low of 0.065% last month, reflecting the power of the Fed's zero interest rate policy, Action Economics said. The market was waiting for the release on Wednesday of the minutes from the Federal Open Market Committee's meeting in April, but nothing significant is expected, said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. "It's unlikely that we're going to get material changes out of the FOMC minutes," he said. On the margin there are concerns about inflation, LeBas said. "Forward breakevens are lower than spot breakevens, suggesting the market thinks inflation is going to rise then fall," he said. Walmart raised its full-year earnings forecast after shoppers armed with government stimulus checks ventured back into stores and Home Depot reported a bigger-than-expected 31% jump in quarterly same-store sales. While the strong results were driven by pent-up demand, the longer-term impact on inflation from increased consumer spending is still an open question. U.S. homebuilding fell more than expected in April as a Commerce Department report showed housing starts tumbled 9.5%. The yield on the 30-year Treasury bond was up 1.6 basis points to 2.371%. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) edged up to 2.734%, after ending Monday at 2.717%, near its highest close in just over a decade. The 10-year TIPS breakeven rate was last at 2.554%, indicating the market sees inflation averaging 2.5% a year for the next decade. May 18 Tuesday 2:15PM New York / 1815 GMT Price Current Net Yield % Change (bps) Three-month bills 0.015 0.0152 0.000 Six-month bills 0.03 0.0304 -0.003 Two-year note 99-243/256 0.1511 -0.002 Three-year note 99-194/256 0.3315 -0.002 Five-year note 99-162/256 0.8259 -0.003 Seven-year note 99-182/256 1.2936 0.004 10-year note 99-200/256 1.6488 0.009 20-year bond 93-160/256 2.2776 0.016 30-year bond 100-20/256 2.3713 0.016 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) GooU.S. 2-year dollar swap 10.25 0.25 spread U.S. 3-year dollar swap spread 11.50 0.25 U.S. 5-year dollar swap spread 8.25 0.50 U.S. 10-year dollar swap -4.00 0.50 spread U.S. 30-year dollar swap -32.00 0.25 spread (Reporting by Herbert Lash; editing by Jonathan Oatis and Richard Chang)