TREASURIES-Yields rise as White House says tariffs will start on Saturday

(Updates to New York afternoon trading)

By Karen Brettell, Douglas Gillison

Jan 31 (Reuters) - U.S. Treasury yields rose on Friday, a day ahead of new U.S. tariffs to be levied on imports from Mexico, Canada and China, and as traders weighed data showing strong consumer spending and a moderate increase in inflation in December. President Donald Trump on Saturday will implement tariffs of 25% on Canadian and Mexican imports and 10% on Chinese goods with immediate effect, White House spokesperson Karoline Leavitt said on Friday.

Uncertainty over the impact of tariffs is muddying the outlook on the economy, with details on the implementation, including whether there will be exemptions, also unsure.

"There's a lot of uncertainty about tariffs and really what comes next on that front," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.

The 2-year note yield, which typically moves in step with Fed interest rate expectations, was last up 3.5 basis points on the day at 4.232%.

The yield on benchmark U.S. 10-year notes rose 5.9 basis points to 4.571%.

The yield curve between two-year and 10-year notes steepened by around 2 basis points to 33.7 basis points.

Yields briefly jumped earlier on Friday after data showed that consumer spending, which accounts for more than two-thirds of U.S. economic activity, beat estimates with a 0.7% jump during December. Meanwhile, the core personal consumption expenditures (PCE) price index rose 0.2% last month, in line with economists' expectations, for an annual gain of 2.8%. The headline PCE price index rose 0.3% last month for an annual gain of 2.6%.

"The very strong personal income spending data continues to suggest that the consumer remains resilient. At the same time, you do have inflationary pressures continuing to fade," Goldberg said. "It really underscores that the Fed can keep rates on hold, at least for the next meeting or so if data like this continues." Fed Chairman Jerome Powell said on Wednesday that the U.S. central bank wants to see further progress in inflation before cutting rates, but also expressed confidence that it remains on the right path to ease back closer to the Fed's 2% annual target. Chicago Fed President Austan Goolsbee said Friday's inflation data was a bit better than expected and gives him comfort that inflation is on a path to the 2% target, adding that he still expects the U.S. central bank's policy rate to be "a fair bit" lower in 12 to 18 months. Fed governor Michelle Bowman said on Friday she still expects declining inflation to allow further interest rate cuts this year, but feels rising wages, buoyant financial markets, geopolitical risks and upcoming administration policies could slow the process and keep price pressures elevated.

Annual inflation data should cool in the coming months due to favorable comparisons with hot readings from a year ago, weighing in favor of lower interest rates, said Stan Shipley, macro research analyst at Evercore ISI.

The Treasury will also release its refunding estimate for the coming quarters next week, with its broad borrowing estimate due on Monday and its more detailed estimate due on Wednesday.

(Reporting by Karen Brettell in New York and Douglas Gillison in Washington, Editing by Nick Zieminski, Deepa Babington and Matthew Lewis)