TREASURIES-US yields rise as strong payrolls curb rate cut bets

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US non farm payrolls rise 303,000 in March

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June rate cut odds decline post-data to 53.3%

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Fed's Logan says too soon to start thinking about rate cuts

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Fed's Barkin says 'that's quite a strong jobs report'

(Adds comments in paragraph 3, 4, 15 and 18-20 Fed remarks in paragraphs 9, 16 and 17 and graphic; updates prices)

By Gertrude Chavez-Dreyfuss

NEW YORK, April 5 (Reuters) - U.S. Treasury yields rose on Friday after data showed the world's largest economy created more jobs than expected last month, suggesting that the Federal Reserve would be in no rush to cut interest rates in the near term.

U.S. nonfarm payrolls grew by 303,000 jobs in March compared with expectations for an increase of 200,000, data showed. The unemployment rate slipped to 3.8% compared with forecasts of 3.9%, while average earnings rose 0.3% on a monthly basis, in line with the consensus number.

"It certainly pushes out the risk of any hard landing or recession. From an inflation perspective, it complicates the story, but it doesn't necessarily overwhelm," said George Bory, chief investment strategist for fixed income at Allspring Global Investments.

"The underlying trend in inflation is moving down slowly and gradually, but clearly with the bounce in economic activity, the downtrend in inflation is going to stall out," he added.

In afternoon trading, the U.S. 10-year yield advanced 6.4 basis points (bps) to 4.373%.

U.S. 30-year yields climbed 5.6 bps to 4.527%.

On the short end of the curve, the two-year yield, which reflects interest rate move expectations, was up 8.6 bps at 4.727%.

Richmond Fed President Thomas Barkin, a voter this year on Fed interest rate policy, said on Friday the unexpected surge in employment in March and drop in the unemployment rate made for a "quite strong jobs report."

The yield curve briefly flattened, or deepened its inversion, following the jobs report from late on Thursday. The spread between U.S. two- and 10-year notes hit as wide as minus 37.6 bps. The curve was last at minus 35.2 bps compared with Thursday's minus 34.3 bps.

This curve, effectively a "bear flattener," refers to a scenario in which short-term rates are rising faster than the long-dated ones.

This reflects concerns about a pick-up in inflation expectations that could prompt the Fed to keep interest rates higher for longer, or even raise them.

Following the jobs data, the U.S. rate futures market has reduced the odds of a June rate cut to 53.3%, down from 66% late on Thursday, the CME's FedWatch tool showed. The market has also pared back expectations for rate cuts to fewer than three this year, from three to four a few weeks ago, according to LSEG's rate probability app.

"On balance, there is some room to adjust rates and adjust them down, but the urgency is fading and the necessity is kind of getting pushed out," said Allspring's Bory.

Dallas Fed President Lorie Logan echoed what many market participants have been thinking about on rate cuts: it's just

too soon

to be thinking about them given the strength of recent economic data.

"I will need to see more of the uncertainty resolved about which economic path we're on. And, as always the (Federal Open Market Committee) should remain prepared to respond appropriately if inflation stops falling," said Logan.

Gennadiy Goldberg, head of U.S. rates strategy in New York said he wondered how long bond investors will stay short Treasuries.

"The source of uncertainty is going to be geopolitics heading into the weekend, and the CPI (consumer price index) print coming up next week," Goldberg said.

"I still think if inflation comes down, June is still very much on the table for a first rate cut, but of course this very large number could make the Fed think twice about imminently cutting rates, especially if the economy is seemingly quite strong and they're still adding jobs at a reasonable rate."

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Karen Brettell; Editing by Christina Fincher, Andrea Ricci and Costas Pitas)