(Adds comments from Fed"s Powell and Evans, adds quote, updates prices) By Karen Brettell NEW YORK, July 15 (Reuters) - U.S. Treasury yields fell to one-week lows on Thursday as Federal Reserve Chairman Jerome Powell testified before Congress for the second day that rising inflation is likely to be transitory and that the U.S. central bank would continue to support the economy. Powell delivered the same pledge of "powerful support" to complete the U.S. economic recovery as he did on Wednesday, an indication he sees no need to rush the withdrawal of support from the economy because of a recent jump in inflation. “He continues to lean a bit more dovishly than what we saw after the June FOMC meeting via the dot plot,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York. "That doesn’t mean that tapering still isn’t on track, and it doesn’t mean that we won’t see some shift in monetary policy in 2022 and 2023 in terms of the liftoff rate hike. Rather, that Powell has been pushing back on this notion that there’s some high degree of urgency to start normalizing rates this year,” Lyngen said. Benchmark 10-year yields fell six basis points on Thursday to 1.297%. The yield curve between two-year and 10-year notes flattened five basis points to 107 basis points. The Fed surprised markets after its June meeting showed that U.S. central bank officials moved their first projected rate increases from 2024 into 2023, with 13 of 18 policymakers foreseeing a "liftoff" in borrowing costs by that year and 11 seeing two quarter-percentage-point rate increases. Long-dated yields have fallen in the past few weeks and the yield curve has flattened as investors prepare for the economic boom from business reopenings to fade, and on concerns that eventually Fed tightening will dampen inflation and slow growth. The market has been choppy at times, however, and market participants say that moves are being influenced by investors positioning for higher rates having to cover those positions when they move against them. “It’s showing us that perhaps positioning is still leaning heavily towards higher rates,” said Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston. "There’s still I’d say, on balance, investors who are underweight their usual duration benchmarks, which is part of the explanation for the price action, which doesn’t really make much sense.” Chicago Federal Reserve President Charles Evans also said on Thursday said he"s still digesting what the recent leap in inflation means for the appropriate timing of interest rate increases, but signaled he still sees liftoff as years away. Data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell to a 16-month low last week as the labor market gains traction, but worker shortages and bottlenecks in the supply chain are frustrating efforts by businesses to ramp up production to meet strong demand for goods and services. The next major U.S. economic release will be retail sales data for June on Friday. July 15 Thursday 3:00PM New York / 1900 GMT Price Current Net Yield % Change (bps) Three-month bills 0.0475 0.0482 -0.003 Six-month bills 0.05 0.0507 0.000 Two-year note 99-206/256 0.2251 -0.004 Three-year note 99-212/256 0.4328 -0.005 Five-year note 100-124/256 0.7752 -0.024 Seven-year note 101-56/256 1.0677 -0.039 10-year note 103-4/256 1.2972 -0.059 20-year bond 106-180/256 1.8448 -0.066 30-year bond 110-72/256 1.9206 -0.068 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.75 0.00 spread U.S. 3-year dollar swap 9.50 -0.25 spread U.S. 5-year dollar swap 7.75 -0.50 spread U.S. 10-year dollar swap -1.50 -0.75 spread U.S. 30-year dollar swap -29.50 -2.00 spread (Reporting by Karen Brettell; Editing by Andrea Ricci and Nick Zieminski)