* U.S. 10-year yield breaches 1.7% on Thursday, then slips * Five-year breakeven inflation rate rises above 3% (Adds IHS data; Powell, analyst comments) By Herbert Lash NEW YORK, Oct 22 (Reuters) - Yields on longer-dated U.S. Treasuries slid on Friday after the benchmark 10-year note breached 1.7% overnight, while key market gauges of rising consumer prices kept pressing higher on concerns about inflation. The yield on 10-year Treasury notes was down 1.6 basis points to 1.659% after rising to a five-month high of 1.7064% late Thursday. The five-year, U.S. break-even inflation rate breached 3% in early trading, then slid. The market in several weeks, if not sooner, will test the year"s high hit March 30 of 1.776% on the 10-year Treasury, said Tom di Galoma, managing director at Seaport Global Holdings. "If we get through that, all bets are off we"re not going to see higher rates," di Galoma said. "Then we"ll probably see 2% pretty quickly." Rates are rising worldwide on a global supply crunch of semiconductor chips for the automotive industry, di Galoma said. The 10-year UK break-even rate hit a 25-year high of 4.29% earlier on Friday, he said. U.S. business activity increased solidly in October, suggesting growth picked up as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing, IHS Markit said in its flash U.S. Composite PMI Output Index. With supply constraints showing no signs of abating, services businesses reported paying higher prices for inputs, supporting views that inflation was unlikely as transitory as has been argued by Federal Reserve Chair Jerome Powell. Powell said in a virtual appearance on Friday that the Fed is "on track" to begin reducing its asset purchases and that he expects inflation to abate next year as COVID pressures fade. Brian Levitt, global market strategist at Invesco, said in a note that he was no longer in inflation denial and that he expects inflationary pressure to moderate over time, but the risks to the economy of higher prices are elevated. The yield on the 30-year Treasury bond was down 3.6 basis points to 2.092%. 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 118.9 basis points. The gap flattened in its biggest contraction since July 19, according to Refinitiv data. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 3.2 basis points at 0.468%. The break-even rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.913%, after closing at 2.894% on Thursday, a year-high. The 10-year TIPS break-even rate was last at 2.647%, indicating the market sees inflation averaging about 2.7% a year for the next decade. The U.S. dollar 5 years forward inflation-linked swap , seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed"s quantitative easing, was last at 2.580%. Oct. 22 Friday 2:00PM New York / 1800 GMT Price Current Net Yield % Change (bps) Three-month bills 0.055 0.0558 0.000 Six-month bills 0.06 0.0609 0.000 Two-year note 99-149/256 0.4677 0.032 Three-year note 99-134/256 0.7875 0.016 Five-year note 98-98/256 1.2138 0.001 Seven-year note 98-94/256 1.4989 -0.010 10-year note 96-80/256 1.6589 -0.016 20-year bond 94-200/256 2.0725 -0.027 30-year bond 97-248/256 2.0919 -0.036 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 17.00 0.50 spread U.S. 3-year dollar swap 15.75 1.25 spread U.S. 5-year dollar swap 7.50 0.50 spread U.S. 10-year dollar swap 1.25 0.50 spread U.S. 30-year dollar swap -21.75 1.00 spread (Reporting by Herbert Lash Editing by Mark Heinrich and Philippa Fletcher)