* 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
(Updates market action, adds quote)
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 and Wall Street dealers sought to resell their
share of this week's $95 billion in fixed-rate government debt
The rise in Treasuries yields accelerated on a surprise
pickup in a private measure of U.S. Midwest business activities
in May, 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 did not stray 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.
"It's mostly about the ECB. The court is for the ECB to
relinquish," said Jim Vogel, interest rate strategist at FTN
Financial in Memphis, Tennessee.
Treasuries lagged German Bunds with their 10-year yield
spread widening a tad from their tightest level in more than
2-1/2 months to 1.10 percent.
A late smattering of buying for month-end portfolio
rebalancing emerged, pushing yields from their earlier highs.
The yield on benchmark 10-year U.S. Treasuries
ended at 2.459 percent, up 1 basis point from Thursday when it
hit 2.422 percent, which was the lowest since last June.
The yield on the 30-year bond last traded at
3.316 percent, up 1 basis point from Thursday when it fell to
3.278 percent, an 11-1/2-month low.
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 data front, U.S. Midwest business activity
accelerated in May to its strongest since October, the Institute
for Supply Management-Chicago said on Friday.
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,
while the government said personal spending unexpectedly dipped
0.1 percent in April, raising some concerns about growth in the
(Reporting by Richard Leong; Editing by Paul Simao and Chizu