TREASURIES-U.S. 10-year yield hits 3 pct as economy shows resilience
* U.S. consumer confidence bounces, new home sales gain * U.S. 2-year yield rise to 2.5 pct, highest since Sept. 2008 * U.S. 10-year yield touches 3 pct for first time in four years * U.S. to sell $32 bln two-year, fixed-rate notes (Updates market action, adds quote) By Richard Leong NEW YORK, April 24 (Reuters) - The U.S. benchmark 10-year Treasury yield topped 3 percent for the first time in more than four years on Tuesday, a milestone that reflects the durability of the U.S. economic expansion and stokes the view the three-decade-old bull market in bonds is numbered. The bond market sell-off since late last week stemmed from inflation worries caused by rising commodity prices and growing Treasury supply, as well as bets the Federal Reserve would further raise key borrowing costs, analysts said. "That we're at a point that we can start to sustain some rises in bond yields speaks to confidence in the economy. And that's what is really critical at this point is to follow the Fed's lead in terms of talking about policy normalization," said Willie Delwiche, investment strategist at Baird in Milwaukee. Tuesday's data on consumer confidence and new home sales, both stronger in April, bolstered the case the economy will continue to grow in the coming quarters. Some analysts argued that rising bond yields, which mortgage and other loan rates are based on, would increase borrowing costs for businesses and consumers, undoing much of the expected benefits from last year's U.S. tax overhaul. At 12:46 p.m. (1646 GMT), the 10-year Treasury yield was up 1 basis point at 2.983 percent after rising to 3.003 percent, which was the highest since January 2014. The two-year yield touched 2.500 percent, which was last seen in September 2008 before subsiding to 2.483 percent, up 1 basis point on the day. "These are psychologically and technically notable levels. They will continue to press higher through the end of the year," said Bill Northey, senior vice president with U.S. Bank Wealth Management in Helena, Montana. Analysts are not sure how much further the 10-year yield will climb. "That doesn't mean there may not be some dicey moments ahead. But for now, it seems like the economy is holding up and healthy enough to take a few punches," said Mike Loewengart, vice president of investment strategy at E*Trade Financial Corp. in New York. If the 10-year yield were to rise to 3.25 or higher, investors may shift more money into Treasuries from stocks and other risky assets. If it were to stall at current levels, investors will likely stick with their current allocations, analysts said. On the supply front, the Treasury Department planned to sell its latest two-year fixed-rate debt on Tuesday. It will offer $35 billion of five-year securities on Wednesday along with $17 billion in two-year floating-rate notes. It will auction $29 billion of seven-year debt on Thursday. Tuesday, April 24 at 1256 EDT (1656 GMT): Price US T BONDS JUN8 142-23/32 -0-8/32 10YR TNotes JUN8 119-80/256 -0-4/256 Price Current Net Yield Change (pct) (bps) Three-month bills 1.8325 1.8667 0.042 Six-month bills 1.995 2.0433 0.005 Two-year note 99-144/256 2.4829 0.009 Three-year note 99-66/256 2.6361 0.003 Five-year note 98-140/256 2.8174 -0.002 Seven-year note 98-12/256 2.9383 0.002 10-year note 98-12/256 2.9808 0.008 30-year bond 97-4/256 3.1551 0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 26.25 -1.00 spread U.S. 3-year dollar swap 20.50 -0.75 spread U.S. 5-year dollar swap 10.25 0.00 spread U.S. 10-year dollar swap 2.50 0.00 spread U.S. 30-year dollar swap -12.75 0.25 spread (Additional reporting by Lewis Krauskopf; Editing by Dan Grebler and Richard Chang)