* U.S. 7-year auction shows strong outcome * U.S. jobless claims fall more than expected * U.S. Q1 GDP growth rate rises * NY Fed"s reverse repo hits record volume of $485.3 bln (Adds analyst comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, May 27 (Reuters) - U.S. Treasury yields advanced on Thursday, bolstered by a New York Times report saying President Joe Biden will announce on Friday a $6 trillion budget for 2022, the largest spending since the second world war, fueling supply concerns. Yields, though, came off a little bit after another strong auction of U.S. 7-year notes. Treasury also auctioned 2-year and 5-year notes on Tuesday and Wednesday, yielding robust results as well. The 7-year note picked up a yield of 1.285%, compared with a when-issued or expected rate of 1.294% at the bid deadline, suggesting investors were willing to receive a lower yield for the note. The bid-to-cover ratio, another gauge of demand, was 2.41, higher than the 2.26 average analysts said. Analysts said the 7-year note benefited from a selloff in Treasuries that set it up nicely for the auction. "The initial selloff in Treasuries was attributed to this morning"s budget headlines and the increase in rates left a solid intraday concession for 7s," said Ben Jeffery, rates strategist at BMO in a note after the auction. Investors typically sell Treasuries ahead of a note or bond sale to push yields higher so they can buy them at a lower price in a move called supply concession. The selloff ahead of the auction accelerated after news of Biden"s proposed budget for next year. The budget figure suggested the U.S. government will be running deficits of more than $1.3 trillion through the next decade, according to the report. The report weighed on Treasury prices because it means the government would have to flood the market with more debt to finance the budget. "That budget is just way too much. How do you even finance that going forward?" said Tom di Galoma, managing director at Seaport Global Holdings. "That"s what the market is struggling with and was quite surprised by it." Thursday"s data on U.S. jobless claims and first-quarter gross domestic product growth rate also helped lift Treasury yields. Both reports showed the U.S. economy was on a stable path to recovery from the pandemic. Initial jobless claims dropped more than expected last week to a seasonally adjusted 406,000 for the week ended May 22, compared with 444,000 the prior week. That was the lowest since mid-March 2020. A separate report confirmed U.S. economic growth advanced in the first quarter at a 6.4% annualized rate, the government"s second estimate for the period, unchanged from the estimate reported last month and following a 4.3% growth rate in the fourth quarter. In late afternoon trading, the U.S. 10-year Treasury yield rose to 1.607% from 1.574% late on Wednesday. U.S. 30-year yields were also up 2.288% from Wednesday"s 2.26%. Post-auction, U.S. 7-year yields were up at 1.259% , compared with 1.23% on Wednesday. In the repurchase market, the Federal Reserve"s reverse repo facility attracted record volume of $485.3 on Thursday. Bigger banks and other financial institutions have increasingly turned to the Fed for reverse repos to park excess cash. May 27 Thursday 3:29PM New York / 1929 GMT Price Current Net Yield % Change (bps) Three-month bills 0.01 0.0101 0.000 Six-month bills 0.03 0.0304 0.000 Two-year note 99-245/256 0.1466 0.000 Three-year note 99-214/256 0.3056 0.003 Five-year note 99-176/256 0.8139 0.016 Seven-year note 99-240/256 1.2594 0.029 10-year note 100-40/256 1.6079 0.034 20-year bond 100-212/256 2.1985 0.028 30-year bond 101-232/256 2.2867 0.027 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 0.25 spread U.S. 3-year dollar swap 12.00 1.25 spread U.S. 5-year dollar swap 6.75 -1.00 spread U.S. 10-year dollar swap -4.00 0.25 spread U.S. 30-year dollar swap -29.00 0.75 spread (Reporting by Gertrude Chavez-Dreyfuss in New York Editing by Nick Zieminski and Matthew Lewis) Our Standards: The Thomson Reuters Trust Principles.