(Updates to late-morning US trading)

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US Treasury yields rise as bond-buying frenzy slows

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Fed expected to cut interest rates amid weak labor market

data

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Traders await CPI report ahead of Fed's policy meeting

By Alden Bentley

NEW YORK, Sept 9 (Reuters) - U.S. Treasury yields rose

on Tuesday as a long-end bond-buying frenzy abated, but briefly

dipped after a benchmark jobs data revision came in on the

weaker side and gave more weight to the weakening labor market

outlook that already had traders boosting expectations for more

Federal Reserve interest rate cuts this year.

The U.S. economy likely created 911,000 fewer jobs in the 12

months through March than previously estimated, compared with

estimates from economists that had ranged between 400,000 and 1

million jobs, suggesting that job growth was already stalling

before President Donald Trump's aggressive tariffs on imports.

That data followed a weak nonfarm payrolls report last week that

showed a gain of only 22,000 jobs in August, which lifted bond

prices and sent the 10-year and 30-year yields to their lowest

levels in several months.

"Certainly the Fed is already geared to cut rates based on

weaker jobs, the job situation as a whole. This does nothing to

dissuade the Fed from moving 25 basis points," said Paul Nolte,

senior wealth advisor and market strategist at Murphy & Sylvest

in Chicago.

"It's a little bit more than expected. We don't know month

by month and won't for a few more months yet, but it points out

that labor is weak."

Signs of labor market weakness have all but guaranteed that the

Fed will cut rates for the first time since December at its

September 16-17 meeting. The question now is how much it will

cut by and how aggressive it will be in the face of mounting

evidence that its mandate to promote employment is shaping up as

an equal challenge to its other imperative of controlling

inflation.

Markets are fully pricing in a cut of at least 25 basis points

next week, with expectations for an outsized 50-basis-point cut

at about 8%, according to CME Group's FedWatch Tool.

But traders are also reluctant to get too far ahead of

themselves before the release on Thursday of the Consumer Price

Index report. The Fed's decision could become complicated if the

CPI report comes in much hotter than the 0.3% expected by

economists polled by Reuters and the 0.2% rise in July.

The yield on the benchmark U.S. 10-year Treasury note

rose 2.8 basis points to 4.074% after briefly

hitting a session low of 4.04% after the benchmark revision jobs

data. The yield on the 30-year bond climbed 3.7

basis points to 4.727%.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 54.3 basis points.

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

typically moves in step with interest rate expectations for the

Fed, gained 3.4 basis points to 3.529%.