(Recasts, updates yields, adds analyst comments) By Karen Pierog CHICAGO, Feb 19 (Reuters) - U.S. Treasury yields on the longer end of the curve rose to new one-year highs on Friday as Congress was poised to act on a massive fiscal stimulus package, while the yield on 30-year inflation-protected securities (TIPS) turned positive for the first time since June. The benchmark 10-year yield reached its highest level since Feb. 26, 2020 at 1.363%. It was last up 5.8 basis points at 1.3448%. The 30-year Treasury yield reached a fresh one-year high of 2.155%. It was last 6.3 basis points higher at 2.1386%. The approximately 14-basis-point rise in 10- and 30-year yields this week was the biggest since the week that ended Jan. 8. In a letter on Friday to the U.S. Senate Democratic Caucus, Senate Majority Leader Chuck Schumer said a $1.9 trillion stimulus package to aid the coronavirus-battered economy was on track to be sent to President Joe Biden before March 14. "The bond market's trying to reprice the fact that the Treasury is going to borrow more money to pay for the stimulus package," said Tom di Galoma, a managing director at Seaport Global Holdings in New York. New York Federal Reserve Bank President John Williams said on Friday that he is not worried that too much government spending could overheat the U.S. economy. Di Galoma said that comment and a rise in European bond yields were also contributing to the upward momentum in Treasury yields. Meanwhile, the 30-year TIPS yield, which had been in negative territory since June, surpassed the 0% mark, rising after a weak auction of $9 billion of the securities on Thursday. It was last at 0.029%. "It's hard to build a fundamental case for 30-year TIPS yields to be negative ever," said Jim Vogel, senior rates strategist at FHN Financial in Memphis, Tennessee. "Over 30 years, that's a lot of Fed accommodation for a long time." The 10-year TIPS yield also rose to its highest level since November. It was last at -0.807%. The two-year Treasury yield, which typically moves in step with interest rate expectations, was last unchanged at 0.1088%. It fell to 0.105% on Thursday, matching a record low reached on Feb. 8. A closely watched part of the yield curve, which measures the gap between yields on two- and 10-year Treasury notes was at its widest since February 2017. It was last about 4.90 basis points higher at 123.43 basis points. Looking ahead to next week, the Treasury Department will auction $60 billion of two-year notes on Tuesday, $61 billion of five-year notes on Wednesday and $62 billion of seven-year notes on Thursday. "Five-year supply should be absorbed, (two-year notes) will go away and aren't really supply and (seven-year notes) will be the big question mark," Vogel said, pointing to concern over whether the seven-year note action can clear below 1%. February 19 Friday 2:50PM New York / 2050 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0325 0.033 -0.005 Six-month bills 0.04 0.0406 0.000 Two-year note 100-8/256 0.1088 0.000 Three-year note 99-188/256 0.2144 0.010 Five-year note 99 0.5807 0.033 Seven-year note 98-122/256 0.9776 0.049 10-year note 97-244/256 1.3448 0.058 20-year bond 98-80/256 1.9777 0.065 30-year bond 94-48/256 2.1386 0.063 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.25 0.25 spread U.S. 3-year dollar swap 10.50 0.50 spread U.S. 5-year dollar swap 13.00 0.75 spread U.S. 10-year dollar swap 8.50 1.00 spread U.S. 30-year dollar swap -21.25 0.00 spread ( Reporting by Karen Pierog; Editing by David Gregorio and Cynthia Osterman)
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