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TREASURIES-U.S. yields little changed as inflation fears dissipate

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(Updates prices, adds details, table) By Herbert Lash NEW YORK, May 26 (Reuters) - U.S. Treasury yields were little changed on Thursday after the benchmark 10-year note slid to a fresh six-week low, with inflation fears continuing to dissipate as corporate announcements point to slowing economic growth. The yield on 10-year Treasury notes rose 0.3 basis point to 2.751% after earlier falling to 2.706%. The market had been waiting for data at the macro level to confirm slower economic growth, but micro data from corporations is providing ample evidence, said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC. "A lot of what's happening are corporate announcements. Apple today, don't ignore it," Ricchiuto said. "People are buying into the view that the economy is getting hit, and the economy getting hit is going to bring down inflation," he said. Apple Inc plans to keep iPhone production for 2022 roughly flat at about 220 million units, Bloomberg News reported, as China's COVID-19 curbs, global supply chain issues and cooling demand hurt smartphone makers. Two-year Treasury yields, which typically move in step with interest rate expectations, fell 4 basis points to 2.462%, a sharp drop from a more than three-year high of 2.844% in early May. Yields also fell after minutes released on Wednesday from a Federal Reserve policy meeting three weeks ago suggested the Fed could pause hiking rates once its policy rate is back to its neutral level. 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 28.7 basis points. The yield on the 30-year Treasury bond was up 3.1 basis points to 2.996%. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.978%. The 10-year TIPS breakeven rate was last at 2.629%, indicating the market sees inflation averaging about 2.6% a year for the next decade. The U.S. dollar five years forward inflation-linked swap , seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.476%. The Treasury Department will auction $42 billion of seven-year notes at 1 p.m. (1700 GMT), the last sale of $137 billion in new coupon-bearing debt this week. May 26 Thursday 10:46 AM New York / 1446 GMT Price Current Net Yield % Change (bps) Three-month bills 1.0525 1.0699 -0.003 Six-month bills 1.4575 1.4887 -0.015 Two-year note 100-19/256 2.4618 -0.040 Three-year note 100-102/256 2.6094 -0.022 Five-year note 99-168/256 2.6989 -0.017 Seven-year note 100-192/256 2.7551 -0.006 10-year note 101-20/256 2.7505 0.003 20-year bond 100-240/256 3.1861 0.039 30-year bond 97-152/256 2.9972 0.032 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 30.00 2.25 spread U.S. 3-year dollar swap 15.75 0.75 spread U.S. 5-year dollar swap 5.25 1.75 spread U.S. 10-year dollar swap 7.75 1.25 spread U.S. 30-year dollar swap -22.00 1.25 spread (Reporting by Herbert Lash; editing by Jonathan Oatis)