TREASURIES-US yields rise after labor market data shows resilience

By Gertrude Chavez-Dreyfuss

NEW YORK, July 1 (Reuters) - U.S. Treasury yields advanced on Tuesday after data showed the labor market remained resilient with the rise in job openings for May, confirming the Federal Reserve's stance of being patient on cutting interest rates.

U.S. job openings unexpectedly increased in May, rising 374,000 to 7.769 million by the last day of May, according to the Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday. Economists polled by Reuters had forecast 7.30 million vacancies.

According to Action Economics, the job openings number was the highest since November.

"There are still a lot of them! The labor market is still tight," wrote Jennifer Lee, senior economist, at BMO in emailed comments after the data. "Keep in mind two words... skills shortage?"

That JOLTS report tied in with comments from Fed Chair Powell, who repeated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering interest rates. He added that the U.S. economy remained in a pretty good position.

When asked if July was too soon to consider rate cuts, the Fed chief said he "can't say" but that the decision would depend on the economic data.

In late morning trading, U.S. 10-year yields rose 3.5 basis points (bps) to 4.261% US10YT=RR after earlier dropping to its lowest since early May.

U.S. 30-year yields edged up 1.3 bps to 4.789% US30YT=RR.

On the shorter end of the curve, U.S. two-year yields, which track interest rate expectations, climbed 3.9 bps to 3.760% US2YT=RR.

Investors also awaited the U.S. Senate's action on President Donald Trump's sweeping tax cut and spending bill.

U.S. Senate Republicans struggled to pass the proposed legislation amid deep divisions within the party about the expected $3.3 trillion increase to the nation's debt pile. The Senate remained in session all through Monday night s they voted on a long series of amendments.

"I think that the progress for the fiscal package has really been slowly priced in," said Will Compernolle, market strategist at FHN Financial in Chicago.

"We already saw the broad contours of the package last week, and so it might be changing the Treasury market on the margins today, but it's really going to be how the Senate ends up voting. That could be a catalyst for market moves. But for right now, okay, it's mostly priced in."