* Treasury to sell $99 bln coupon-bearing supply
* Fed to release meeting minutes Wednesday
By Karen Brettell
NEW YORK, May 21 (Reuters) - U.S. Treasury yields fell on Monday as investors evaluated whether last week’s selloff that sent benchmark yields to almost 7-year highs was overdone, with demand for U.S. debt also to be tested this week by new supply.
The Treasury will sell $99 billion in short and intermediate-dated notes this week, including $33 billion in two-year notes on Tuesday, $36 billion in five-year notes on Wednesday and $30 billion in seven-year notes on Thursday.
Demand for the debt will likely depend on whether investors are more attracted by the higher yields, or reticent to buy the debt with further weakness possible.
“I think that’s going to be really the tug of war, investors who think rates to continue rising further versus those who will get in at an auction and say we like rates where they are,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York.
Investors are nervous of further yield increases as the Federal Reserve appears on track to raise rates at least two more times this year. Concerns about the U.S. deficits and rising government debt needs are also weighing on bonds.
Two-year note yields, which are the most sensitive to rate hikes, rose as high as 2.598 percent on Thursday, the highest since August 2008, before falling back to 2.569 percent on Monday.
Benchmark 10-year note yields rose to 3.128 percent on Friday, the highest since July 2011, before falling back to 3.074 percent on Monday.
The Fed will release minutes from its May meeting on Wednesday, which will be further evaluated for indications of how many rate hikes are likely this year.
The U.S. central bank left rates unchanged at the meeting and expressed confidence that a recent rise in inflation to near the U.S. central bank's target would be sustained, leaving it on track to raise borrowing costs in June.
The government will also sell $16 billion in two-year floating rate notes on Wednesday.
Editing by Chizu Nomiyama