Jan 31 (Reuters) - U.S. Treasury yields briefly jumped

and then fell to end only modestly higher on the day on Friday

after data showed that core inflation rise at a moderate pace in

December while consumer spending surged, solidifying

expectations the Federal Reserve will keep rates on hold for the

coming months.

The core personal consumption expenditures (PCE) price index

rose 0.2% last month, in line with economists' expectations, for

an annual gain of 2.8%. The headline PCE price index rose 0.3%

last month for an annual gain of 2.6%.

Consumer spending, which accounts for more than two-thirds

of U.S. economic activity, meanwhile beat estimates with a 0.7%

jump during the month.

"The very strong personal income spending data continues to

suggest that the consumer remains resilient. At the same time,

you do have inflationary pressures continuing to fade," said

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

in New York. "It really underscores that the Fed can keep rates

on hold, at least for the next meeting or so if data like this

continues."

Fed Chairman Jerome Powell said on Wednesday that the U.S.

central bank wants to see further progress in inflation before

cutting rates, but also expressed confidence that it remains on

the right path to ease back closer to the Fed's 2% annual

target.

Fed governor Michelle Bowman said on Friday she still

expects declining inflation to allow further interest rate cuts

this year, but feels rising wages, buoyant financial markets,

geopolitical risks, and upcoming administration policies could

slow the process and keep price pressures elevated.

Uncertainty over the impact of potential tariffs by the

Donald Trump administration is muddying the outlook on the

economy.

"Markets are struggling to figure out what to focus on here.

I think that's one of the biggest issues... that the data seems

to be relatively good, but there's a lot of uncertainty about

tariffs and really what comes next on that front," Goldberg

said.

Companies, consumers and farmers across North America braced

on Friday for Trump to impose 25% tariffs on Canadian and

Mexican imports within hours, moves that could disrupt nearly

$1.6 trillion in annual trade.

The 2-year note yield, which typically moves in

step with Fed interest rate expectations, was last up 1.2 basis

points on the day at 4.21%.

The yield on benchmark U.S. 10-year notes rose 1

basis points to 4.523%.

The yield curve between two-year and 10-year notes

was little changed on the day at 31.6 basis

points.