* U.S. 2-year yields rise to fresh 2-year high * U.S. data was weaker than expected on a monthly basis * Fed funds futures price 5 rate hikes * Probability of 50 basis-point hike declines after U.S. data (Recasts, adds comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Jan 28 (Reuters) - U.S. Treasury yields fell across the curve on Friday on month-end buying, although this is likely a temporary pause to the uptrend in rates as the Federal Reserve prepares to hike interest rates several times this year, starting with the March meeting, to control surging inflation. "For the most part, there has been some real money buying the dip in Treasuries mainly due to month-end portfolio adjustments," said Tom di Galoma, managing director at Seaport Global Holdings. The U.S. bond market sold off in January, pushing yields higher, as investors worried about the Fed's hawkish turn, which started during the December policy meeting and affirmed by the Fed minutes released earlier this month. Fed Chair Jerome Powell delivered the final shot on Wednesday, as he all but guaranteed the March tightening, and successive ones after that. Because of the sell-off, investors would then have to buy Treasuries to rebalance their portfolios. Most Treasury yield curves also steepened on Friday, after flattening for the last three sessions, as weaker-than-forecast consumption and labor cost data eroded some expectation of a large interest rate increase by the Fed of half a percentage point in March. A flattening of the curve reflects impending rate hikes that pushes short-term rates higher. The spread between 5-year and 30-year yields, widened to as much as 53.70 basis points, and was last at 46.20. The 2-year and 10-year yield curve steepened to as much as 65.10 basis points, after hitting its narrowest spread since November 2020 on Thursday. That curve was last at 61.10 basis points. After the U.S. data, fed funds futures have priced in about 120 basis points of tightening, or nearly five hikes for 2022. The probability of a 50 basis-point hike in March declined to 18%, from about 32% before the data's release. Friday's reports were mixed, with some weak elements on a monthly basis. Overall though, the numbers still suggested higher near-term inflation that should keep the Fed on its tightening path. U.S. data showed personal income and spending were weaker than expected in December. But the core personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 4.9% year-on-year, the biggest increase in 39 years. A report on U.S. employment costs also showed a lower-than-expected rise of 1% for the fourth quarter. The index though climbed to 4% on a year-on-year basis, the largest such increase since 2001. U.S. 2-year yields, which reflect interest rate expectations, soared to 1.228% earlier in the session, the highest since February 2020. But that rise occurred way before the release of the U.S. numbers and the 2-year yield was last down 3 basis points at 1.1603%. U.S. 5-year yields, which is also an indicator of the market's rate outlook, fell 5 basis points to 1.6127% . The benchmark 10-year yield fell 3.5 basis points to 1.7730% , while 30-year yields slipped nearly 2 basis points to 2.0754%. January 28 Friday 3:40PM New York / 2040 GMT Price Current Net Yield % Change (bps) Three-month bills 0.1875 0.1902 -0.015 Six-month bills 0.4275 0.4344 0.000 Two-year note 99-110/256 1.1643 -0.028 Three-year note 99-70/256 1.3766 -0.042 Five-year note 99-114/256 1.6159 -0.047 Seven-year note 100-12/256 1.7429 -0.041 10-year note 96-104/256 1.7766 -0.031 20-year bond 97-160/256 2.1479 -0.024 30-year bond 95-124/256 2.0791 -0.012 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 15.00 1.75 spread U.S. 3-year dollar swap 15.25 1.75 spread U.S. 5-year dollar swap 7.25 1.25 spread U.S. 10-year dollar swap 7.00 1.00 spread U.S. 30-year dollar swap -17.00 0.00 spread (Reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Alistair Bell)