BENGALURU, Feb 12 (Reuters) - Long-dated U.S. Treasury yields will hold steady in the near term but rise later this year on inflation and Federal Reserve independence concerns, while short-dated yields edge down on Federal Reserve rate cut bets, a Reuters survey showed on Thursday.

Nearly 60% of bond strategists in the February 5-11 survey, 21 of 37, also said heavy Treasury issuance in the coming years to finance President Donald Trump’s tax-cut and spending plans would make a significant reduction in the Fed’s $6.6 trillion balance sheet unfeasible.

The legislation would add at least $4.7 trillion to U.S. deficits over a 10-year window, recent Congressional Budget Office estimates show. Dealers and investors are waiting for further guidance from the Treasury on when debt supply will increase substantially.

In the meantime, GDP growth has been stronger than expected and inflation has been stuck above the Fed's 2% target for about half a decade.

After months of trimming yield forecasts, downplaying risks of an inflation surprise and despite having no details on coming debt supply, strategists have subtly reversed course.

Survey medians show the benchmark 10-year Treasury note yield rising to 4.29% in a year, up from 4.20% predicted last month. US10YT=RR

"There will likely be a narrative of inflation being on its way down and the Fed cutting, and once we see some evidence of the opposite, it'll come as a bit of a wake-up call with some volatility in the near term. That'll lead to a bit more inflation and risk premium as a result," said Jean Boivin, head of the BlackRock Investment Institute.

"That, and the broader debt backdrop will contribute to an ongoing march higher for 10-year yields and beyond."

The Fed was forecast to deliver two cuts later this year, starting in June when Kevin Warsh is expected to take over as Federal Reserve chair, a separate Reuters survey found.

The interest-rate-sensitive 2-year yield was forecast to decline from 3.50% to 3.45% at end-April and 3.38% at end-July. US2YT=RR

At 4.16%, the 10-year has traded in a range recently, and many say that is likely to continue for several months.

"We've pretty much traded in a tight range of 4.0-4.3% on the 10-year and there's nothing really to drive us out of this range" in coming months, said John Madziyire, head of U.S. Treasuries and TIPS at Vanguard.

SIGNIFICANT FED BALANCE SHEET REDUCTION UNFEASIBLE

The Fed has shrunk its balance sheet by about a quarter, letting maturities expire, from nearly $9 trillion at its mid-2022 peak following large-scale pandemic-era bond buying.

But several experts said reducing it significantly from here will be difficult given the scale of Treasury issuance expected in coming years.

There is widespread uncertainty, too, about Warsh’s likely approach. His earlier views favoured tighter policy and a smaller Fed balance sheet, while more recent signals lean toward lower rates.

"You're moving in two different directions to be cutting policy rates and looking to shrink the balance sheet at the same time," said Meghan Swiber, director of U.S. rates strategy at Bank of America.

"Even though there have been a lot of questions around Warsh given his more hawkish stance on the balance sheet, we see a relatively low likelihood that actually materializes."

Alejandra Vazquez Plata, interest rate strategist at Citi, said Warsh would likely first focus on rate cuts before removing longer-dated Treasury securities from the Fed's balance sheet, at least this year.

"The Fed will probably let coupon holdings roll off and instead of purchasing coupons, start purchasing T-bills instead. That's probably the path of least resistance for now," she said.