(Adds open of U.S. market) By Herbert Lash NEW YORK, July 23 (Reuters) - Treasury yields moved higher on Friday as investors looked ahead to the Federal Reserve"s policy-setting meeting next week, where the strength of the U.S. recovery and when the Fed might start to curb its support for the economy will be in focus. The yield on 10-year Treasury notes hovered around 1.3%, or almost 17 basis points higher than a five-month low set Tuesday, but was still at the low end of a recent range. The benchmark note traded up 1.8 basis points to 1.285%. The yield on the 30-year Treasury bond rose 2.5 basis points to 1.928%. Fears of renewed lockdowns due to the Delta variant of the coronavirus and the Fed"s insistence that inflation will remain within its 2% target have recently spurred a sharp rally in Treasury prices, which move inversely to yields. But the durability of that rally, given expectations for improving fundamentals through this year, is questionable barring renewed lockdowns, said Jonathan Cohn, trading strategist at Credit Suisse Securities (USA) LLC. "We continue to believe yields ought to go higher but at this point think it"s prudent to be more tactical with entry points and holding periods as the market attempts to find an equilibrium," he said. Real yields are close to record lows and the market is questioning whether the Fed can hike more than a couple of times given tapering is actively discussed, with inflation data surprising on the upside, Cohn said. This "speaks to that need to be tactical and respect some of the puzzling price action in rates," 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 108.3 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 0.4 basis points at 0.198%. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.515%. The 10-year TIPS breakeven rate was last at 2.317%, indicating the market sees inflation averaging that rate annually for the next decade. July 23 Friday 10:24AM New York / 1424 GMT Price Current Net Yield % Change (bps) Three-month bills 0.05 0.0507 0.003 Six-month bills 0.05 0.0507 0.000 Two-year note 99-219/256 0.2001 -0.002 Three-year note 100-2/256 0.3724 -0.003 Five-year note 100-196/256 0.7166 0.005 Seven-year note 101-120/256 1.0298 0.012 10-year note 103-32/256 1.2847 0.018 20-year bond 106-164/256 1.848 0.023 30-year bond 110-28/256 1.9275 0.025 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.00 0.00 spread U.S. 3-year dollar swap 10.50 0.50 spread U.S. 5-year dollar swap 8.00 -0.25 spread U.S. 10-year dollar swap -0.50 -0.50 spread U.S. 30-year dollar swap -27.00 -0.25 spread (Reporting by Herbert Lash; Editing by Dan Grebler) Our Standards: The Thomson Reuters Trust Principles.