* Dealers sales of this week's supply pressure yields higher
* Long-dated Treasuries on track as top U.S. bonds in May
* Benchmark yields not far above their 11-month lows
By Richard Leong
NEW YORK, May 30 Benchmark U.S. Treasuries
yields rose on Friday as the investor demand that stoked May's
bond rally faded further and Wall Street dealers sought to
resell their share of this week's $95 billion in fixed-rate
government debt supply.
The rise in Treasuries yields accelerated on a surprise
increase in a private measure on U.S. Midwest business
activities in March, supporting the view of a solid economic
rebound in the second quarter after a contraction in the first
quarter due partly to a harsh winter.
"You had a redistribution of supply yesterday and that
seemed to have continued," said Larry Milstein, head of U.S.
government and agencies trading at R.W. Pressprich & Co. in New
Longer-dated yields were not too far above the 11-month lows
they set earlier this week on some doubts about the U.S.
economic recovery and bets that the European Central Bank might
embark on an aggressive stimulus program next week that could
end up lowering U.S. and euro zone yields.
Despite the modest market pullback, Treasuries were on track
to produce another month of solid returns. So far in May, they
have generated a total return of 0.99 percent, according to an
index compiled by Barclays.
The bank's index on Treasuries that mature in 20 years or
longer has risen 3.18 percent month-to-date, which would be the
best performance among U.S. bonds in May.
On the open market, the yield on benchmark 10-year U.S.
Treasuries was last at 2.480 percent, up 3 basis
points from late Thursday. It hit 2.422 percent on Thursday,
which was the lowest since last June.
The yield on the 30-year bond last traded at
3.328 percent, up 2 basis points from Wednesday's close. On
Thursday, it fell to 3.278 percent, an 11-1/2-month low.
So far in May, the 10-year yield has fallen 17 basis points,
while the 30-year yield has declined 13 basis points, according
to Reuters data.
On the data front, upper U.S. Midwest business activity
accelerated in May, hitting its strongest level since October,
the Institute for Supply Management-Chicago said on Friday.
"It's not a sustained trend yet, but things are improving,"
Other news on the U.S. economy was mixed. Thomson Reuters
and the University of Michigan's final May reading on U.S.
consumer sentiment was a bit below forecast.
Earlier, the government said personal spending unexpectedly
dipped 0.1 percent in April following a revised 1 percent jump
in March, raising some concerns about consumer spending in the
second quarter. It reported another 0.2 percent monthly gain in
the core index on personal consumption expenditure, the Federal
Reserve's preferred inflation gauge.
(Reporting by Richard Leong; Editing by Paul Simao)