(Updates with market activity, analyst comment, removes dateline) By Ross Kerber and Saikat Chatterjee Feb 26 (Reuters) - U.S. Treasury yields subsided in cautious trading on Friday as investors repositioned, but worries about rising inflation weighed on sentiment as data showed a strong rebound in consumer spending. The benchmark 10-year U.S. Treasury note"s yield was down 5.2 basis points at 1.4633%. On Thursday it touched 1.614%, the highest in a year, rocking world markets. The note"s yield is still up more than 50 basis points so far this year. Yields in other major government bonds have also increased. Raymond James market analyst Ellis Phifer said Friday"s trading showed investors turning cautious and repositioning after Thursday"s jump. "We moved vertical in rates and there"s a point where things get overdone," he said. Part of Friday"s decline could also reflect dealers convincing clients to buy bonds after poor demand for a 7-year note auction on Thursday, he added. U.S. consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 2.4% last month after decreasing 0.4% in December, the Commerce Department said on Friday, setting up the economy for faster growth in the first quarter. 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, was at 132 basis points, about 2 basis points lower than Thursday"s close. On Thursday, the gap touched 141 basis points, the most since 2015. The U.S. secured overnight financing rate (SOFR), which measures the cost of borrowing cash overnight using Treasury securities as collateral, was at 0.03% after dropping to 0.01% 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 down 1.9 basis points at 0.1466% on Friday. The yield on 30-year Treasury Inflation Protected Securities was at 0.171%. The 10-year TIPS yield was at -0.640% and the breakeven inflation rate was at 2.1%. February 26 Friday 9:13AM New York / 1413 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0425 0.0431 0.000 Six-month bills 0.0575 0.0583 -0.003 Two-year note 99-245/256 0.1466 -0.019 Three-year note 99-114/256 0.3133 -0.024 Five-year note 98-166/256 0.7763 -0.024 Seven-year note 99-174/256 1.1728 -0.035 10-year note 96-224/256 1.4633 -0.052 20-year bond 96-28/256 2.1149 -0.087 30-year bond 92-208/256 2.204 -0.105 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.50 2.00 spread U.S. 3-year dollar swap 11.00 2.50 spread U.S. 5-year dollar swap 9.00 1.75 spread U.S. 10-year dollar swap 6.00 1.75 spread U.S. 30-year dollar swap -28.50 2.25 spread (Reporting by Ross Kerber and Saikat Chatterjee. Editing by Larry King and Mark Potter)