TREASURIES-Yields touch one-month low in skittish pre-jobs trade

By Amanda Cooper

LONDON, Sept 6 (Reuters) - U.S. Treasury yields fell for a fourth straight day to one-month low on Friday in jittery trading ahead of the upcoming monthly jobs report that could determine the size of the Federal Reserve's first rate cut in five years this month.

The benchmark 10-year note fell by as much as 2.5 basis points overnight to 3.708%, its lowest since Aug. 5. In early European trading, it was down 2 bps at 3.712%.

The two-year note, which is more closely linked to shifts in expectations for U.S. interest rates, was down 2.5 bps at 3.7268%, skimming its lowest since May 2023.

Economists polled by Reuters expect 160,000 workers to have been added to nonfarm payrolls in August, following July's rise of 114,000.

The July report, which undershot expectations, contributed to the intense volatility in early August that battered stocks and prompted an unwinding in long positions in the dollar against the lower-yielding Japanese yen as investors dramatically repriced their expectations for Fed monetary policy.

Private-sector employment data on Thursday also painted a picture of deterioration in the U.S. labour market, putting markets on edge ahead of Friday's broader number.

Futures show traders expect 100 bps in rate cuts by December this year, with a 70% chance of a half-point cut coming as early as the Fed's next meeting on Sept. 18. Analysts said Friday's jobs report could either confirm or upend those expectations.

In addition, New York Fed President John Williams and Fed board governor Christopher Waller deliver remarks at separate events later on Friday.

Investors are likely to look for further insight into whether a quarter- or a half-point cut is more probable after payrolls, Pepperstone strategist Chris Weston said.

"If the market is left with any ambiguity as to how the NFP and unemployment rate read through to potential Fed policy changes, consider that Fed governor Waller speaks shortly after the data drops - so he'll give traders some initial steer as to whether the NFP print pushes the Fed closer to a 25-bp or 50-bp cut," he said. (Reporting by Amanda Cooper; Editing by Jan Harvey)