TREASURIES-U.S. yields off highs with eyes on Ukraine border

 (Updates prices, changes comment, adds detail on Ukraine)
    By Rodrigo Campos
    NEW YORK, Feb 14 (Reuters) - Benchmark U.S. 10-year Treasury
yields rose in choppy trading on Monday with investors keeping
close tabs on the escalation of the conflict between Ukraine and
Russia.
    Comments from a top Federal Reserve official on the need to
signal a strong backing to the 2% inflation target with higher
rates kept yields higher earlier in the session, with the
10-year note yielding above 2%, while the two-year rose faster
and the curve flattened.
    But headlines about an attack from Russia on Ukraine as soon
as Wednesday triggered bond buying and yields fell off their
session highs.
    Russia has more than 100,000 troops massed near the border
of Ukraine. It denies Western accusations that it is planning an
invasion, but says it could take unspecified
"military-technical" action unless a range of demands are met,
including barring Kyiv from ever joining the NATO alliance.
    The intensifying conflict has also been a drag on financial
markets, weighing on risky assets like stocks while helping
drive oil to its highest since 2014.
    "Today it's just been different headlines tied to the same
geopolitical risk," said Jim Barnes, director of fixed income at
Bryn Mawr Trust.
    "It's a risk-on risk-off type phenomenon in the markets, not
so much the economic impact. One can translate into the other...
but we're not at the point where this would impact any of the
Fed's decisions."    
    St. Louis Federal Reserve President James Bullard said
Monday on CNBC that the Fed's "credibility is on the line" in
its quest to bring inflation down from the current 40-year high
of more than 7%.             
    The yield on 10-year Treasury notes             was up 3.6
basis points to 1.988% after touching a high of 2.026%.
    The yield on the 30-year Treasury bond             was up
3.7 basis points to 2.292%. 
    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 40.5 basis points after having touched its
tightest since July 2020.
    The two-year            U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 6.4 basis
points at 1.581%. 
    The breakeven rate on five-year U.S. Treasury
Inflation-Protected Securities (TIPS)              was last at
2.886%, after closing at 2.82% on Friday.
    The 10-year TIPS breakeven rate               was last at
2.51%.
    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 2.356%.

 (Reporting by Rodrigo Campos; 
Editing by Bernadette Baum and Andrea Ricci)