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US non farm payrolls rise 303,000 in March

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June rate cut odds decline post-data to 56.3%

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US yield curve narrows inversion

(Adds analyst comment, details of jobs report, byline, bullets,

updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 5 (Reuters) - U.S. Treasury yields rose

on Friday after data showed the world's largest economy created

more jobs than expected last month, suggesting that the Federal

Reserve would be in no rush to cut interest rates in the near

term.

U.S. nonfarm payrolls grew by 303,000 jobs in March compared

with expectations for an increase of 200,000, data showed. The

unemployment rate slipped to 3.8% compared with forecasts of

3.9%, while average earnings rose 0.3% on a monthly basis, in

line with the consensus number.

"The numbers certainly beat expectations on headline,

revisions, unemployment rate, average hourly earnings - there's

very few obvious blemishes to this figure so I think it is going

to be hard for markets to ignore this particular print," said

Gennadiy Goldberg, head of U.S. rates strategy, at TD Securities

in New York.

"The market is pushing Fed rate cut expectations a

little bit further out on this reading, and of course you're

seeing Treasuries bear flatten on this report, so not surprising

there."

Post-data, the U.S. 10-year yield advanced 7.1 basis points

(bps) to 4.387%. The two-year yield was up 7.2 bps

at 4.712%.

The yield curve briefly flattened, or deepened its

inversion, following the jobs report from late on Thursday. The

spread between U.S. two- and 10-year notes hit as wide as minus

37.6 bps. The curve was last at minus 33.5 bps

compared with Thursday's minus 34.3 bps.

This curve, effectively a "bear flattener," refers to a

scenario in which short-term rates are rising faster than the

long-dated ones. This suggests concerns about a pick-up in

inflation expectations that could prompt the Fed to keep

interest rates higher for longer, or even raise them.

Following the jobs data, the U.S. rate futures market

has reduced the odds of a June rate cut to 56.3%, down from 66%

late on Thursday, the CME's FedWatch tool showed.

The market has also pared back expectations for rate cuts

to fewer than three this year, from three to four a few weeks

ago, according to LSEG's rate probability app.