NEW YORK, Jan 3 (Reuters) - U.S. Treasury yields eased

early on Friday, marking time before the release of a report on

December manufacturing that will be the last morsel to trade on

in a week still quieted by the year-end holidays.

The Institute of Supply Management adds its purchasing

managers index from last month into the mix at 10 a.m. ET/1500

GMT. Manufacturing makes up a far smaller portion of the U.S.

economy than the consumption side and the market will be more

focused on the string of labor market data coming out next week

culminating in Friday's December employment report.

Given low unemployment and stubborn inflation, the Federal

Reserve is expected to refrain from easing again this month,

with traders in Fed funds futures putting the odds of it

standing pat near 90% and chances of the first 25 basis point

cut of 2025 coming in March at 50/50.

The Fed reduced interest rates by a full percentage point

from September to December, beginning a more accommodative

monetary policy after hiking rates from zero to about 5.5% in

2022 and 2023.

There is also uncertainty over how President-elect Donald

Trump's promised tariffs, tax cuts and immigration crackdown

might affect the economy and already enormous fiscal deficit.

A complicating factor for how fast those policies are

implemented is Friday's Republican House members' vote on

whether to let Mike Johnson remain Speaker of the House. If he

loses the too-close-to-call vote and no other speaker is chosen

by Jan. 6, the House will not be able to certify Trump's

election victory on that day.

The yield on benchmark U.S. 10-year notes was

3.2 basis points below Thursday's late level to 4.543%. The

30-year bond yield fell 3.5 basis points to 4.7629%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

fell 1.3 basis points to 4.235%.

The 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 30.6 basis points, slightly

flatter than +31.5 bp late Thursday.

(Editing by Daniel Wallis)