TREASURIES-U.S. 10-year yield hits 7-year high, soggy TIPS sale

* Investors, speculators uncertain about market's direction

U.S. $11 bln 10-year TIPS auction fails to inspire demand

* U.S. to sell $99 bln coupon issues, $16 bln FRN

* U.S. jobless claims rise, Philly Fed data improve

(Updates market action, adds quote) NEW YORK, May 17 (Reuters) - U.S. 10-year Treasury yields rose to a near seven-year peak on Thursday, extending this week's bond market selloff, as traders and investors have not reached a consensus on whether it was time to buy or if the market was vulnerable to more selling. Technical indicators suggested the Treasuries market is the most oversold since three weeks ago when the 10-year yield rose above 3 percent for the first time since January 2014. These chart signals, however, have not lured bargain-minded investors to jump back into bonds, which would send yields lower. "The market is trying to figure where the bottom is. At this point, it is not clear," said Mary Ann Hurley, vice president of fixed income with D.A. Davidson in Seattle. The U.S. Treasury Department's $11 billion reopening of a prior issue of 10-year Treasury Inflation Protection Securities (TIPS) drew mediocre bidding. Demand for new Treasury supply will be tested again next week with $99 billion in fixed-rate coupon issues and $16 billion in two-year floating-rate notes (FRN).

Hurley and other traders reckoned bets on rising inflation and federal borrowing will likely push the 10-year yield to 3.25 percent. Some analysts laid the blame more on technical factors behind this week's market selloff. "It's more a technical move than one driven by fundamentals," said Bruno Braizinha, interest rate strategist at SG Corporate & Investment Banking in New York. On balance, recent U.S. economic readings, including payrolls and consumer price data in April, have fallen short of market expectations, Braizinha noted. New applications for U.S. jobless benefits rose more than forecast last week after hitting their lowest level since 1969 in late April. On the other hand, Mid-Atlantic business activity rose to its strongest in a year, based on an index from the Philadelphia Federal Reserve. Benchmark 10-year Treasury notes yielded 3.109 percent, up over 1 basis point from late on Wednesday. The yield touched 3.122 percent earlier Thursday, which was the highest since July 2011, according to Reuters data. Since the 10-year yield on Tuesday broke above 3.05 percent, seen as a critical support level, there are no signs yet that asset managers are bailing from their hefty bullish bets on longer-dated Treasuries or that speculators are rushing out of their heavy bearish bond positions, analysts said. The Treasuries market's risks are "symmetric," meaning yields could move in either direction, Braizinha said. If the 10-year yield hits 3.25 percent, "it's a definite buy." May 17 Thursday 3:00PM EDT/ 1900 GMT Price

US T BONDS JUN8 140-15/32 -0-15/32 10YR TNotes JUN8 118-128/256 -0-12/256 Price Current Net Yield % Change


Three-month bills 1.8725 1.9074 0.002 Six-month bills 2.0375 2.0872 0.002 Two-year note 99-160/256 2.5729 -0.016 Three-year note 99-166/256 2.7482 -0.011 Five-year note 99-42/256 2.9324 -0.002 Seven-year note 98-212/256 3.0633 0.005 10-year note 98 3.1094 0.014 30-year bond 97-180/256 3.2454 0.030


Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 24.00 1.00


U.S. 3-year dollar swap 18.25 1.00


U.S. 5-year dollar swap 9.75 0.50


U.S. 10-year dollar swap 3.00 -0.25


U.S. 30-year dollar swap -8.75 -1.25


(Reporting by Richard Leong; Editing by Bernadette Baum and James Dalgleish)