NEW YORK, Dec 30 (Reuters) - Benchmark 10-year U.S. Treasury yields dipped from one-month highs on Thursday, with no major catalysts to drive market direction and many traders out before the New Year’s holiday. Yields rose on Wednesday as the Treasury sold new seven-year notes to weak demand, the final sale of $169 billion in coupon-bearing supply this week. Investors are wary of U.S. government debt with the Federal Reserve expected to raise rates as soon as May as it faces stubbornly high inflation and an improving economy. The U.S. central bank will release minutes from its December 14-15 meeting next week, which will be evaluated for any new signs Fed officials are concerned that high inflation will persist longer than previously expected. Any insight into Fed thinking around the economic risks of the Omicron coronavirus variant will likely be outdated, however, after its rapid spread over the past few weeks. COVID-19 deaths and hospitalizations are "comparatively" low as the variant spreads, Centers for Disease Control and Prevention Director Rochelle Walensky said on Wednesday as cases in the United States reached a record high. read more Yields were little changed after data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell last week. read more Benchmark 10-year note yields were last at 1.52%, after reaching 1.56% on Wednesday, the highest since Nov. 29. The yields are on track for the largest yearly increase since 2013, of 60 basis points. Two-year yields were last at 0.74%. They are on course for a yearly increase of 62 basis points, the largest since 2017. The yield curve between two-year and 10-year notes was at 77 basis points, after reaching 71 basis points on Tuesday, which was the flattest since Nov. 23. The curve is only slightly flatter than where it ended last year, at 79 basis points. Inflation expectations have risen this week, with traders pricing in average annual inflation of 2.89% for the next five years, up from 2.79% on Monday. Traders and lenders are also expected to face deteriorating liquidity on contracts based on the London interbank offered rate (Libor) after the year-end deadline to stop basing new trades and loans on the benchmark. read more Three-month Libor was at 21 basis points on Thursday. December 30 Thursday 3:00PM New York / 2000 GMT Price Current Yield % Net Change (bps) Three-month bills 0.045 0.0456 -0.005 Six-month bills 0.1925 0.1954 -0.008 Two-year note 100-5/256 0.7402 -0.010 Three-year note 100-24/256 0.9677 -0.013 Five-year note 99-226/256 1.2743 -0.021 Seven-year note 99-146/256 1.4398 -0.023 10-year note 98-184/256 1.5152 -0.028 20-year bond 100-152/256 1.9637 -0.026 30-year bond 98-224/256 1.9247 -0.029 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap spread 19.25 0.00 U.S. 3-year dollar swap spread 20.00 0.25 U.S. 5-year dollar swap spread 9.25 0.25 U.S. 10-year dollar swap spread 6.25 -0.50 U.S. 30-year dollar swap spread -18.50 -1.25 Editing by Chizu Nomiyama and Dan Grebler