(Recasts with upcoming Fed conference, updates yields, adds analyst comment) By Karen Pierog CHICAGO, Aug 21 (Reuters) - U.S. Treasury yields were mixed on Friday as the market drifted in light trading and looked ahead to next week's Federal Reserve Jackson Hole virtual economic policy conference and $148 billion of note sales. The benchmark 10-year yield was last down less than a basis point at 0.6412%. "It's been a very quiet afternoon just on summer flows," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. He said light summer volume was keeping the market in check, although a rally on the long end of the curve pushed yields lower. The 30-year yield was last down 2.1 bps at 1.3559%. Earlier on Friday, yields rose after data firm IHS Markit reported that its flash U.S. Composite PMI Index rose to a reading of 54.7 this month - the highest since February 2019 - from 50.3 in July. Its flash - or preliminary - indicator for the manufacturing sector stood at its highest since January 2019 and for the services sector it was the highest since March 2019. Remarks by Fed Chair Jerome Powell next Thursday could bring added volatility to Treasuries "if he says anything out of the realm of what expectations are," according to Lederer. Meanwhile, a barrage of Treasury supply will continue next week with $50 billion of two-year notes on Tuesday, $51 billion of five-year notes on Wednesday, and $47 billion of seven-year notes on Thursday. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 49.30 bps, about a basis point lower than at Thursday's close. August 21 Friday 2:37PM New York / 1937 GMT Price Current Net Yield % Change (bps) Three-month bills 0.095 0.0963 0.000 Six-month bills 0.115 0.1167 -0.002 Two-year note 99-245/256 0.1473 0.006 Three-year note 99-222/256 0.1698 0.008 Five-year note 99-228/256 0.2723 0.004 Seven-year note 99-116/256 0.4552 0.002 10-year note 99-216/256 0.6412 -0.003 20-year bond 99-212/256 1.1346 -0.016 30-year bond 100-120/256 1.3559 -0.021 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.50 0.00 spread U.S. 3-year dollar swap 6.50 0.00 spread U.S. 5-year dollar swap 5.00 0.50 spread U.S. 10-year dollar swap -0.25 1.00 spread U.S. 30-year dollar swap -38.00 2.25 spread (By Karen Pierog Editing by Chizu Nomiyama and Nick Macfie)
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