TREASURIES-Prices rise, 10-year yields hold at 2 percent
* Prices rise, 10-year yields hold at 2 percent * Focus remains on likelihood of Fed tapering purchases * Market will close early for Memorial Day holiday weekend * Treasury to sell $99 billion in 2, 5 and 7-year notes next week By Karen Brettell NEW YORK, May 24 (Reuters) - U.S. Treasuries prices edged up on Friday after briefly turning negative on strong manufacturing data, as traders evaluated the likelihood of the U.S. Federal Reserve pulling back on bond purchases this year. Benchmark 10-year Treasuries yields have held above 2 percent since Fed Chairman Ben Bernanke said on Wednesday that the U.S. central bank may decide to pull back on its bond purchases in the coming few meetings if data show the economy is gaining steam. Investors are now grappling with whether or not the dramatic yield increase this month is exaggerated relative to the pace of economic improvement, or whether yields are likely to continue to climb on stronger growth and a more hawkish turn by the Fed. "Now the market has heard Bernanke and seen the minutes and we're seeing some better data, the market is going to start to decide where they think the Fed is going sooner than later," said Jason Rogan, managing director of Treasuries trading at Guggenheim Partners in New York. "Right now the market has interpreted that Bernanke's comments, although maybe taken a little bit out of context, give the impression that the Fed is willing to at least announce tapering over the next couple of meetings and that by itself might be enough to push us to a little bit higher yields," he said. Ten-year notes were last up 5/32 in price to yield just above 2 percent, after briefly rising to 2.03 percent on data that showed that orders for long-lasting U.S. manufactured goods rose more than expected in April. The notes yields have increased from as low as 1.88 percent on Wednesday, before Bernanke's comments, and have surged from 1.61 percent at the beginning of May on higher hopes for the economy. Rogan sees the notes as likely having some support at around 2.08 percent. The next major data release will be this month's jobs report, which is due to be released in two weeks. The Treasury will sell $99 billion in new coupon-bearing debt next week, including $35 billion in two-year notes on Tuesday, $35 billion in five year notes on Wednesday and $29 billion seven-year notes on Thursday. The U.S. bond market will close at 2 p.m. EDT on Friday and is closed on Monday for the Memorial Day holiday.