* U.S. 30-year yields fall to one-week low * Fed's George -Comfortable with 50-bps hikes in upcoming meetings * U.S. 10-year TIPS auction shows lackluster results (Adds comment, 10-year TIPS auction, bullets, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, May 19 (Reuters) - U.S. Treasury yields fell on Thursday, with those on benchmark 10-year notes sliding to three-week lows, as continued softness in U.S. economic data fueled growth concerns amid aggressive monetary tightening by the Federal Reserve. U.S. 10-year yields dropped to 2.772%, the lowest since late April, and was last down 3.3 basis points at 2.851%. Since hitting a roughly 3-1/2-year high of 3.203% early last week, the 10-year yield has fallen 43 bps. U.S. 30-year yields were also lower, declining to a one-week trough of 2.975%. They were last at 3.065%, down by less than 1 bps. "I don't think we have seen a peak in yields yet. We need to see jobs take a hit, or inflation moderates at a faster pace," said Ellis Phifer, managing director, fixed income research at Raymond James in Memphis, Tennessee. "But we still have a lot of supply chain issues. And we also have issues with China's zero-COVID policy where they lock down everything, which makes supply chain problems more difficult. It's hard to think yields are done rising." Thursday's data showed another weak batch of economic numbers. Initial jobless claims unexpectedly rose last week, hitting a four-month high of 218,000 for the week ended May 14. The number likely suggested slowing demand for labor amid tightening financial conditions. Continuing claims though were at their lowest since the end of 1969. A separate report from the Philadelphia Fed showed its business conditions index dropped to 2.6 in May from 17.6 in April. U.S. existing home sales also fell to their lowest in nearly two years in April, as house prices jumped to a record high amid a persistent lack of inventory. U.S. two-year yields were also weaker on the day, down 5.5 bps at 2.603%. Kansas City Fed President Esther George, a voter on this year's Federal Open Market Committee on Thursday reinforced expectations of multiple 50 basis-point hikes at upcoming Fed meetings. But she downplayed the notion that the Fed might shift to larger rate increases. "We are good at 50 basis points right now, and I would have to see something very different to say we need to go further than that," George said in an interview on CNBC. U.S. rate futures have priced a fed funds rate of 2.77%, compared with the current 0.83% level. The market has also factored in cumulative rate increases of 193 bps in 2022. Also on Thursday, the U.S. Treasury auctioned $14 billion in 10-year Treasury Inflation Protected Securities (TIPS), and results were lackluster. The auction posted a high yield of 0.232%, lower than the expected rate at the bid deadline. The 2.24 bid-to-cover ratio, a gauge of demand, was the lowest since July 2018. U.S. 10-year TIPS yield was last 0.208%, up 6 bps. "The scant real yield offered by today's auction does not compensate investors very well with the risks of a more hawkish Fed," said Tom Simons, money market economist, at Jefferies. May 19 Thursday 3:09PM New York / 1909 GMT Price Current Net Yield % Change (bps) Three-month bills 1.0325 1.0495 0.010 Six-month bills 1.47 1.5015 -0.030 Two-year note 99-197/256 2.6219 -0.045 Three-year note 99-230/256 2.7856 -0.052 Five-year note 99-136/256 2.8521 -0.039 Seven-year note 99-250/256 2.8786 -0.036 10-year note 100-48/256 2.8533 -0.031 20-year bond 99-248/256 3.2521 -0.004 30-year bond 96-88/256 3.0622 -0.009 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 29.25 1.50 spread U.S. 3-year dollar swap 14.00 0.75 spread U.S. 5-year dollar swap 3.50 0.50 spread U.S. 10-year dollar swap 6.25 0.50 spread U.S. 30-year dollar swap -26.50 0.50 spread (Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis and Marguerita Choy)
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