(Updates with prices, analyst comment) By Herbert Lash NEW YORK, July 21 (Reuters) - The yield on benchmark U.S. Treasuries rebounded for a second day on Wednesday as fears of new COVID-19 lockdowns eased and a rally in equity markets pointed to a robust economic recovery as investors awaited an auction of 20-year Treasury bonds. The yield on 10-year Treasury notes was up 7.9 basis points to 1.288%. The yield on the 30-year Treasury bond was up 7.7 basis points to 1.946%. Investors are grappling with when the Federal Reserve begins to remove, or "taper," its support for the U.S. economy and whether a recent hike in inflation is transitory, as the Fed projects, or will be persistent as many in the market believe. Yields on the benchmark 10-year Treasury note plunged almost 30 basis points from July 13, when data showed the biggest jump of U.S. consumer prices in 13 years in June, to a low of 1.128% early on Tuesday. Yields have rebounded 16 basis points since then. The Treasury plans to sell $24 billion in 20-year bonds at 1 p.m. EDT (1700 GMT). Traders also are waiting to see the Congressional Budget Office"s latest estimate of when the U.S. government would be unable to pay its bills if Congress does not approve an increase in the debt ceiling, currently at $28.5 trillion. The federal government has shut down three times in the past decade over debt haggling in Congress. "The main event today is the CBO report on the debt limit," said Nancy Davis, managing partner and chief investment officer at Quadratic Capital Management LLC in Greenwich, Connecticut. "Some of the 10-year move is ahead of that event." 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 107.9 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.4 basis points at 0.208%. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.468%. The 10-year TIPS breakeven rate was last at 2.291%, indicating the market sees inflation averaging about 2.3% a year for the next decade. July 21 Wednesday 11:08AM New York / 1508 GMT Price Current Net Yield % Change (bps) Three-month bills 0.05 0.0507 0.000 Six-month bills 0.05 0.0507 0.000 Two-year note 99-215/256 0.2078 0.014 Three-year note 99-250/256 0.3829 0.026 Five-year note 100-176/256 0.733 0.059 Seven-year note 101-104/256 1.0394 0.071 10-year note 103-24/256 1.2884 0.079 20-year bond 106-100/256 1.8628 0.080 30-year bond 109-168/256 1.9465 0.077 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.25 spread U.S. 3-year dollar swap 10.75 1.25 spread U.S. 5-year dollar swap 8.50 1.50 spread U.S. 10-year dollar swap 0.25 2.00 spread U.S. 30-year dollar swap -28.75 2.00 spread (Reporting by Sujata Rao; Editing by Will Dunham, Nick Zieminski and Mark Heinrich)