TREASURIES-Treasuries slip after Yellen says tax cuts should be repealed

(Adds comments in paragraphs 6, 7.) By Herbert Lash NEW YORK, Jan. 19 (Reuters) - Treasury department returns fell slightly Tuesday after Treasury Secretary candidate Janet Yellen during the confirmation of the Senate said tax cuts enacted in 2017 for large corporations should be lifted. Yellen, a former chairman of the Federal Reserve, also urged lawmakers to "go big" on the next coronavirus bailout, adding that the benefits outweigh the costs of a higher debt burden. "Although the debt has increased in relation to the economy, the interest burden has not increased," she told the Senate Finance Committee. Yellen said she believed that part of the signed 2017 tax reform bill, such as lowering corporate tax rates, should be repealed, although tax rates would not return to pre-2017 levels. The 10-year benchmark yields <US10YT-RR> traded immediately after their session low of 1.090% and fell on earlier slight gains. Jack Ablin, chief investment officer at Cresset Asset Management in Chicago, said he was not sure the market would react to Yellen's statement, given that it was a well-known figure and that he responded the first time she announced her nomination. "I don't think there is any doubt that it will be approved. It only confirms what most investors are already seeing," Ablin said. "She really only represents the (incoming) administration, like a cabinet member would." President-elect Joe Biden, who will take office on Wednesday, tabled a $ 1.9 trillion stimulus package last week. He said bold investments are needed to stimulate the economy and accelerate vaccine distribution to get the coronavirus under control. Previously, breakeven rates on US 10-year TIPS, which measure expected annual inflation for the next 10 years, rose to a more than two-year high of 2.11%, from 2.089% on Friday. Long end rates have risen in anticipation of rising inflation. "In general, people here expect inflation to pick up. You can see it in inflation expectations, which are tending to be higher," said Stan Shipley, macro research analyst at Evercore ISI in New York. Crude oil, many manufactured goods prices, both tradable and non-tradable like plastics, are rising, Shipley said. If the new Biden administration's spending plans are added, higher rates are likely to be expected this year, he said. "The Biden government will try to accelerate wage growth," he said. The 10-year benchmark returns <US10YT-RR> were trading at 1.090% and falling on past gains. The key rate closed at 1.085% on the Friday before the long US weekend and the markets closed on Monday for Martin Luther King Jr. Day. Interest rates two weeks ago rose above 1% for the first time since March and have tended to be higher since then. Yellen told the Senate committee that expanded unemployment and food aid will be the "biggest bank for the money" in stimulus spending. The focus will be on the needs of workers in urban and rural areas, she said. Yields rose last week before Biden's announcement of the stimulus plan. Federal Reserve officials have quashed market speculation that the US Federal Reserve will withdraw or curtail its bond-buying program. The yield curve between two- and ten-year bonds rose slightly to 96.40 basis points. January 19, Tuesday 3:21 PM New York / 2021 GMT Price Current Net Yield% Change (basis points) Quarterly Bills 0.08 0.0811 0.000 Six Month Bills 0.09 0.0913 0.000 Two-Year 99-253 / 256 0.131 -0.006 Three-Year 99-198 / 256 0.2011 -0.008 five-year bond 99-168 / 256 0.4453 -0.010 seven-year bond 99-4 / 256 0.7708 -0.009 10-year bond 98 1.0903 -0.007 20-year bond 95-128 / 256 1.6419 -0.010 30-year bond 95-28 / 256 1 .8388 -0.013 DOLLAR SWAP SPREADS Last (basis points) Net change (basis points) US 2-year dollar swap 7.25 0.50 Spread US 3-year dollar swap 6.50 0.50 Spread US -5-year dollar swap 7.00 -0.25 spread US 10-year dollar swap -0.25 -0.50 spread US 30-year dollar swap -26.50 -1.00 spread (reporting by Herbert Lash; additional reporting by Sinead Carew in New York; editing by Marguerita Choy and Mark Heinrich)

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