(Recasts, updates yields, adds analyst comments and repo rate) By Karen Pierog CHICAGO, Feb 2 (Reuters) - U.S. Treasury yields climbed on Tuesday and the yield curve steepened on supply concerns as Congressional Democrats were set to take initial steps to advance President Joe Biden"s massive COVID-19 relief plan. The benchmark 10-year yield was last up 2.8 basis points at 1.1048%. A closely watched part of the yield curve, which measures the gap between yields on two- and 10-year Treasury notes , was last up 1.98 basis points at 98.59 basis points. The spread between five-year notes and 30-year bonds , which is at levels last seen in 2016, widened to as much as 144.75 basis points. It was last at 143.11 basis points. Gennadiy Goldberg, senior U.S. rates strategist at TD Securities in New York, said the market was eyeing the possibility of increased Treasury supply to fund another round of stimulus spending. "It"s all about the fiscal deal and there is an expectation in the market that something will get done relatively soon. That seems to be the big driver today," he said. Progress on fiscal relief helped lift Wall Street, fueling a risk-on sentiment that dimmed the attraction of safe-haven Treasuries. Congressional Democrats on Tuesday were poised to plow ahead with procedural votes advancing Biden"s $1.9 trillion package to aid the coronavirus-battered economy. On Monday the Democratic president met with 10 Republican U.S. Senators who are seeking a downsized $618 billion plan. While the White House said the discussion was "productive," Biden told the senators their plan did not go far enough. In the near term, analysts expect Treasury supply to remain steady in Wednesday"s quarterly refunding announcement, which includes auction sizes for each maturity of notes and bonds. The U.S. Treasury Department on Monday reported lower anticipated borrowing during 2021"s first and second quarters along with a huge cash balance. "I think the Treasury can keep issuance unchanged after it severely cut back the borrowing requirements for Q1 and Q2 with yesterday"s announcement," said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. "So I don"t expect any increases in Treasury supply relative to kind of where we are right now." The Treasury noted its borrowing estimates do not include assumptions for any future enacted coronavirus relief and stimulus-related measures, which it said could boost actual borrowing. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was last up less than a basis point at 0.1172%. In the short-term lending markets, the U.S. overnight repurchase agreement rate (repo) was at 0.10%, down from 0.13% on Monday. That rate plunged to 0.03% last week, the lowest since May 2020 amid an excess of cash. February 2 Tuesday 3:51PM New York / 2151 GMT Price Current Net Yield % Change (bps) Three-month bills 0.055 0.0558 -0.012 Six-month bills 0.07 0.071 -0.003 Two-year note 100-4/256 0.1172 0.006 Three-year note 99-212/256 0.1835 0.009 Five-year note 99-168/256 0.4447 0.021 Seven-year note 99-188/256 0.7891 0.028 10-year note 97-224/256 1.1048 0.028 20-year bond 94-196/256 1.6873 0.029 30-year bond 94-72/256 1.8765 0.031 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.25 -0.25 spread U.S. 3-year dollar swap 8.25 0.00 spread U.S. 5-year dollar swap 10.75 0.25 spread U.S. 10-year dollar swap 5.00 0.50 spread U.S. 30-year dollar swap -24.25 0.25 spread (Reporting by Karen Pierog; editing by Jonathan Oatis and Marguerita Choy)