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TREASURIES-U.S. yields edge up as supply offsets political concerns

* U.S. Treasury to sell $88 bln in coupon-bearing debt

* Concerns about stimulus delay support bids for bonds

* Bankers see $35 bln in high-grade bonds this week - IFR

* U.S. bond market to close early Friday, shut next Monday

(Updates market action, adds quote) NEW YORK, May 22 (Reuters) - U.S. Treasury yields were marginally higher on Monday as light selling tied to this week's government and corporate bond supply overrode safe-haven bids underpinned by worries about probes into U.S. President Donald Trump's 2016 campaign. The U.S. Treasury Department planned to sell a combined sum of $88 billion in two-year, five-year and seven-year debt ahead of the Memorial Day holiday weekend. The U.S. bond market is scheduled to close early at 2 p.m. (1800 GMT) on Friday and will be shut on Monday. Corporations were also tapping investors for cash with bankers expecting $35 billion in investment-grade deals this week, according to IFR, a Thomson Reuters unit. Traders will also watch for clues from Federal Reserve officials this week on whether the U.S. central bank may raise interest rates at its June 13-14 policy meeting. "It was very quiet today. The market is going to have a hard time with direction this week," said Mary Ann Hurley, vice president of fixed income trading at D.A. Davidson in Seattle. Over 821,000 10-year Treasury futures contracts changed hands on Monday, the lowest since April 17, CME Group data showed. As some investors reduced their bond holdings to make room for the new supply, there were signs speculators increased stakes for bond yields to fall in the wake of reports on a widening investigation into Trump's presidential campaign and whether it colluded with Russia last year. Last Wednesday, the S&P 500 and the Dow suffered their steepest one-day drops since September following reports that Trump tried to interfere with a federal investigation of his campaign. Investors fled into safe-haven Treasuries, pushing benchmark yields to one-month lows. More reports alleging possible coordination between Trump's campaign officials and Russia have emerged. "The headlines are not going to go away and ... the administration's push with its economic agenda seems to be seriously compromised," said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston. Anxiety about Trump and Republican lawmakers' ability to deliver on promised tax cuts, looser regulations and infrastructure spending was limited by higher stock prices.

The benchmark 10-year Treasury yield was 2.252 percent, up 0.7 basis point from Friday, while the 30-year yield was 2.914 percent, 0.8 basis point higher. Last Thursday, the 10-year yield hit a one-month low at 2.180 percent, while the 30-year yield fell to 2.874 percent, the lowest level since April 21, Reuters data showed. May 22 Monday 3:10PM New York / 1910 GMT Price

US T BONDS JUN7 153-26/32 -0-1/32 10YR TNotes JUN7 126-32/256 -0-16/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 0.8875 0.9017 -0.012 Six-month bills 1.0275 1.0471 0.023 Two-year note 99-242/256 1.2786 0.000 Three-year note 100-34/256 1.4542 0.002 Five-year note 100-96/256 1.7952 0.008 Seven-year note 99-156/256 2.0606 0.008 10-year note 101-24/256 2.252 0.007 30-year bond 101-188/256 2.9128 0.007

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 24.50 1.00

spread

U.S. 3-year dollar swap 20.75 1.00

spread

U.S. 5-year dollar swap 7.00 -0.25

spread

U.S. 10-year dollar swap -7.00 -0.50

spread

U.S. 30-year dollar swap -47.25 -0.75

spread

(Reporting by Richard Leong; Editing by Paul Simao and Chizu Nomiyama)