(Inserts dropped word in firm name Evercore ISi )

By Tatiana Bautzer

NEW YORK, June 26 (Reuters) - Yields on 2-year Treasury

notes eased on Thursday morning after the Labor Department

reported a slight fall in weekly jobless claims, but higher

recurring claims indicated that more people are staying out of

work for longer.

"You are starting to see some cracks in the labor market, and

that may give some confidence to markets that the Federal

Reserve can begin easing in September", said Stan Shipley, fixed

income strategist at Evercore ISI in New York.

First-quarter GDP was also revised lower, although data going

through March did not impact the Treasury market. Durable goods

orders rose more than expected in May, but the main factor was

the surge in commercial aircraft bookings. Outside the

transportation industry, orders were muted.

The two-year U.S. Treasury yield, which

typically moves in step with interest rate expectations, were

down 3.7 basis points to 3.756%. The yield on the benchmark U.S.

10-year Treasury note fell 2.8 basis points to

4.265%. The yield on the 30-year bond fell 1.3

basis points to 4.829%.