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TREASURIES-Prices mid-curve up a bit before 5-year auction
* Intermediate-term bond prices firm before 5-year auction
* Bid emerged at 10-year 3.04-3.065 percent support area
* Unexpected U.S. durables drop briefly supported prices (Updates to before 5-year note auction)
NEW YORK, July 28 (Reuters) - Prices of intermediate-term U.S. Treasuries prices rose slightly on Wednesday as traders positioned for the Treasury's upcoming five-year note auction.
Prices of three-, five- and seven-year notes, located in the so-called belly of the curve, were narrowly higher.
The benchmark U.S. 10-year Treasury note US10YT=RR was flat, its yield at 3.05 percent. Earlier, it rose on news of a drop in durable goods orders in June.
Traders said the market was focused on the Treasury's five-year note auction at 1 p.m. (1700 GMT) this afternoon.
Dealers say the five-year note, richer in value than the two-year coupon the Treasury Department successfully sold on Tuesday, might look less appealing to investors.
But others noted that the yield on the note had risen since the sales were announced, a factor that could draw bidders.
The five-year sale is the second of three note auctions scheduled this week totaling $104 billion.
Traders said the five-year auction could "tail," that is it might see a high yield above the comparable securities' yield on the open market. That would mean investors wanted more value for their purchases.
The Treasury's last sale of five-year notes, in late June, tailed, surprising the Street after a well bid two-year sale.
Treasuries prices have been on a downward path for several days while underwriting $94 billion in short-term securities, said John Spinello, chief fixed-income technical strategist at Jefferies & Co.
Spinello said some concession in price and yield might be needed with the five-year somewhat expensive relative to other maturities on the yield curve. He said the five-year "should not be the issue of choice at this time."
In when-issued trade, the five-year note US5YT=RR to be sold this afternoon yielded 1.818 percent. The seven-year note to be sold on Thursday yielded 2.49 percent. These levels were unchanged from early in the trading session.
The Federal Reserve will release its Beige Book, an anecdotal narrative describing business conditions across the nation, at 2 p.m. (1800 GMT).
With the market in possession of recent Federal Open Market Committee minutes and Fed Chairman Ben Bernanke's congressional testimony last week, the Beige Book should offer the market little new information.
Spinello cited technical resistance for the 10-year note in the area between 3.02 and 2.975 percent and support back at 3.05 to 3.07 percent,
New orders for durable goods fell for a second straight month in June, posting their largest decline since August, according to a government report on Wednesday.
Analysts said the 1.0 percent drop in orders offered further evidence economic growth cooled in the second quarter.
Ward McCarthy, chief financial economist at Jefferies & Co in New York, said the bond market liked the report, which echoed "the more cautious tone" evident in other data. (Editing by James Dalgleish)
