(Recasts with U.S. retail sales, changes dateline, previous LONDON) By Karen Brettell NEW YORK, July 16 (Reuters) - U.S. Treasury yields rose from one-week lows on Friday after data showed that U.S. retail sales unexpectedly rose in June, though doubts about the strength of the economic recovery and dovish Federal Reserve policy were seen as likely keep a cap on yields in the near-term. Demand for goods remained strong even as spending is shifting back to services, bolstering expectations that economic growth accelerated in the second quarter. Retail sales rebounded 0.6% last month, the Commerce Department said on Friday. Data for May was revised down to show sales falling 1.7% instead of declining 1.3% as previously reported. The data was “a little better,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. However, yields are holding near last week’s lows and “we’re sort of just sitting nowhere now.” Yields have dropped since Federal Reserve Chair Jerome Powell on Wednesday and Thursday pledged "powerful support" to complete the U.S. economic recovery, and indicated that he sees no need to rush the withdrawal of support from the economy because of a recent jump in inflation. “I think most people expected higher yields at this point, just given the economy’s reopening … but Powell’s fairly dovish, so it’s really hard to. It doesn’t feel like it"s ready to really go back to the year-to-date high yields,” Lederer said. Benchmark 10-year notes were last up three basis points on the day at 1.331%. They are holding just above five-month lows of 1.250% reached last week and are down from 1.776% in March. The yield curve between two-year and 10-year notes steepened on basis point to 108 basis points. The yield curve has flattened in recent weeks as investors prepare for the economic boom from business reopenings to fade, and on concerns that eventual Fed tightening will dampen inflation and slow growth. That said, some analysts say that long-dated yields may be too low relative to expected growth. “The current level of Treasury yields imply a relatively pessimistic growth outlook: the current level of yields would be justified if we lowered our growth forecasts by nearly 3%-pts, implying just 0.5% real growth over the next year,” analysts at JPMorgan said in a report late on Thursday. “We think these concerns are overstated, but other recent episodes indicate this gap is unlikely to close quickly,” they said. July 16 Friday 9:08AM New York / 1308 GMT Price Current Net Yield % Change (bps) Three-month bills 0.045 0.0456 -0.002 Six-month bills 0.05 0.0507 0.000 Two-year note 99-197/256 0.2437 0.019 Three-year note 99-192/256 0.4593 0.026 Five-year note 100-70/256 0.8185 0.044 Seven-year note 100-246/256 1.1059 0.038 10-year note 102-180/256 1.3305 0.033 20-year bond 106-28/256 1.8793 0.035 30-year bond 109-136/256 1.9518 0.033 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 7.50 -0.25 spread U.S. 3-year dollar swap 9.75 0.25 spread U.S. 5-year dollar swap 7.25 -0.50 spread U.S. 10-year dollar swap -1.75 -0.25 spread U.S. 30-year dollar swap -29.75 -0.25 spread