(Updates with market activity, SOFR) By Ross Kerber Feb 24 (Reuters) - Traders sent longer-term U.S. Treasury yields higher and steepened the yield curve on Wednesday but then pulled back some of those increases as Federal Reserve Chairman Jerome Powell continued signaling the central bank will leave interest rates unchanged for a long time. The benchmark 10-year yield was up 1.8 basis points at 1.3824% in afternoon trading. It had reached as high as 1.435% in the morning, its first time above 1.4% since a year ago, before settling as Powell gave a second day of testimony in Washington. The bond selloffs pushed up a closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations. It went as wide as 130 basis points, the most since late 2016, then narrowed and last traded at 126 basis points, up 3 from Tuesday"s close. Other parts of the yield curve also reached milestones as investors sold longer-term U.S. debt along with some sovereigns. Analysts said the trading reflected a range of factors including Powell"s message since Tuesday that the Fed would continue to provide economic support. Speaking to the U.S. House Financial Services Committee on Wednesday, Powell said it may take more than three years to reach the Federal Reserve"s inflation goals. The Fed has said it will not raise interest rates until inflation has exceeded 2%. Patrick Leary, chief market strategist and senior trader at Incapital, said the morning trading could be seen as a sign of investor skepticism about Powell"s reassurance. "The reality is that the market is not believing what the chairman is saying... the market either doesn"t believe what he"s saying or it thinks that inflation could be a bigger problem," Leary said. But the later pullback in yields suggested the initial rise was also driven by quantitative strategies before traders decided the increase was overdone and lacked a main catalyst, said Edward Moya, senior market analyst at OANDA in New York. "The morning move got out of hand," Moya said, especially since Powell"s testimony to the House on Wednesday was little different than his message the day before to the Senate"s equivalent committee. "Did we learn anything new from Powell today? No," Moya said. The U.S. Treasury sold $61 billion worth of five-year notes at a high yield of 0.621%, with a bid-to-cover ratio of 2.24. The results were called "a bit soft" by BMO Capital Markets analyst Ben Jeffery in a note to investors, who noted the average bid-to-cover ratio was 2.45. The U.S. secured overnight financing rate (SOFR), which measures the cost of borrowing cash overnight using Treasury securities as collateral, dropped to 0.01% on Wednesday, the lowest since May 2020. SOFR has replaced the London interbank offered rate (LIBOR) as an interest rate benchmark for banks. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.125%. The yield on 30-year Treasury Inflation Protected Securities was at 0.112% after reaching as high as 0.14% The 10-year TIPS yield was at -0.796% and the breakeven inflation rate was at 2.183%. February 24 Wednesday 3:25PM New York / 2025 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0325 0.033 0.000 Six-month bills 0.05 0.0507 -0.002 Two-year note 100 0.125 0.003 Three-year note 99-170/256 0.2385 0.015 Five-year note 98-224/256 0.6069 0.028 Seven-year note 98-66/256 1.0109 0.025 10-year note 97-156/256 1.3824 0.018 20-year bond 96-220/256 2.0678 0.038 30-year bond 92-32/256 2.237 0.038 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 -0.75 spread U.S. 3-year dollar swap 9.75 -0.50 spread U.S. 5-year dollar swap 11.50 -1.75 spread U.S. 10-year dollar swap 6.00 -2.00 spread U.S. 30-year dollar swap -27.75 -3.00 spread (Reporting by Ross Kerber in Boston; Additional reporting by Herbert Lash in New York; Editing by Hugh Lawson and David