TREASURIES -US two-year yields turn lower after drop in private sector jobs

NEW YORK, July 2 (Reuters) - U.S. Treasury two-year yields turned lower on Wednesday after data showed an unexpected drop in private sector jobs last month, raising the chances of a rate cut from the Federal Reserve at the July meeting.

U.S. two-year yields, which track interest rate expectations, fell 1.9 basis points (bps) to 3.758% US2YT=RR.

Private payrolls dropped by 33,000 jobs last month after a downwardly revised 29,000 increase in May. Economists polled by Reuters had forecast private employment increasing 95,000 following a previously reported gain of 37,000 in May.