* 10-year yields hit highest since September 2014
* Deadline for U.S. government funding bill approaching
NEW YORK, Jan 19 - Yields on the 10-year U.S. government bond hit a three-year high on Friday as weakness in overnight trading pushed the debt through key technical support levels and resulted in further selling.
"This is one of those times when the price action is deciding further price action," said Michael Lorizio, senior fixed income trader at Manulife Asset Management in Boston.
The benchmark 10-year yield hit its highest level since September 2014 on Friday at 2.646 percent, breaking the 2017 record of 2.64 percent that the market had been flirting with all week.
The 2017 high represents a technical level for 10-year notes. Yields at or below 2.64 percent may indicate the market will hold those rates in the near-term. If they close above that level, the market will probably test the next-highest milestone.
"If we dont (hold at 2.646 percent), were probably looking at a trade towards 2.75 or possibly 3 percent," said Tom di Galoma, managing director at Seaport Global in New York.
Analysts did not see news about the potential U.S. government shutdown as influencing the market, noting that such events have been short-lived in the past.
"History tells us that it doesn't have a major economic impact on a longer-term basis," said Lorizio. "The global capital markets do not seem to be pricing in a whole lot of disruption."
Racing against a midnight deadline, the U.S. Congress will try on Friday to send President Donald Trump legislation to keep the government operating and avoid federal agency shutdowns that would otherwise begin on Saturday.
Due to gains on longer-dated yields, the yield curve steepened for the third day in a row.
The spread between two-year and 10-year yields rose to a high of 59.1 basis points after closing at 57.9 basis points on Thursday. The spread between five-year yields and 30-year yields rose to a high of 50.3 basis points from 48.3 basis points.
On Friday, the market will also be watching a speech from Federal Reserve Vice Chair for Supervision Randal Quarles, who has yet to make clear where he falls on the dove-hawk spectrum.
At 11:17 a.m. (1617 GMT), 10-year Treasury yields were at 2.637 percent. The two-year's were at 2.056 percent after hitting 2.065 percent earlier in the day, the highest since September 2008. (Reporting by Kate Duguid; Editing by Lisa Von Ahn) )