(Adds U.S. market open) By Herbert Lash NEW YORK, July 22 (Reuters) - U.S. Treasuries traded little changed on Thursday prior to an auction later in the session of $16 billion in 10-year TIPS after the latest weekly jobless claims report reinforced expectations the Federal Reserve"s policy stance will remain dovish. The yield on 10-year Treasury notes fell 2 basis points to 1.262%. The yield on the 30-year Treasury bond slid 1.9 basis points to 1.911%. The number of Americans filing new claims for jobless benefits rose to a two-month high last week, the Labor Department said in a report that nevertheless showed more people are returning to work. Initial claims for state unemployment benefits increased by 51,000 to a seasonally adjusted 419,000 for the week ended July 17, the highest level since mid-May. Economists polled by Reuters had forecast 350,000 applications for the latest week. After several weeks of sharp volatility, the market is settling into a period of equilibrium, said Ben Jeffery, rate strategist at BMO Capital Markets in New York. "Trading volumes today are meaningfully lower than they have been all week," he said. "Positions are in the process of starting to be set ahead of next week"s Fed meeting, so we"re expecting a little bit of sideways into Wednesday." The 10-year U.S. Treasury will likely trade in a range of 1.25% to 1.3%, Jeffery said. Yields on the benchmark note plunged almost 30 basis points to a low of 1.128% early on Tuesday from July 13, when data for June showed the biggest jump in U.S. consumer prices in 13 years. Yields have rebounded about 14 basis points since then. The Treasury auction of 10-year Treasury Inflation-Protected Securities at 1 p.m. ET (1700 GMT) should be well-received, but has the potential of being the lowest-yielding 10-year TIPS auction on record, Jeffery said. "It will offer an interesting glimpse at people"s expectations of inflation and how committed (Fed Chair Jerome) Powell will be to a dovish stance next week," he said. 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 106.0 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 0.8 basis points at 0.200%. The breakeven rate on five-year U.S. TIPS was last at 2.458%. The 10-year TIPS breakeven rate was last at 2.273%, indicating the market sees inflation averaging just under 2.3% a year for the next decade. July 22 Thursday 10:57AM New York / 1457 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 99-218/256 0.2018 -0.006 Three-year note 100-2/256 0.3724 -0.016 Five-year note 100-206/256 0.7088 -0.022 Seven-year note 101-148/256 1.0138 -0.021 10-year note 103-88/256 1.2616 -0.020 20-year bond 106-232/256 1.8327 -0.018 30-year bond 110-128/256 1.9113 -0.019 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.25 0.00 spread U.S. 3-year dollar swap 10.75 0.75 spread U.S. 5-year dollar swap 8.50 1.00 spread U.S. 10-year dollar swap 0.25 1.00 spread U.S. 30-year dollar swap -27.25 1.50 spread (Reporting by Herbert Lash; Editing by Dan Grebler) Our Standards: The Thomson Reuters Trust Principles.