TREASURIES-Uncertain prospects for further Fed rate cuts boost Treasury yields

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Fed's Powell says December rate cut not guaranteed

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US Treasury yields rise amid lower rate-cut odds

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Government shutdown's effect on data may affect policy

By Tatiana Bautzer

NEW YORK, Oct 30 (Reuters) - U.S. Treasury yields continued to rise on Thursday as markets saw lower odds of another Federal Reserve interest rate cut in December and wondered about the effects of a prolonged U.S. government shutdown on monetary policy. In a press conference on Wednesday after the U.S. central bank announced a widely expected quarter-percentage-point rate cut, Fed Chair Jerome Powell said another cut in December "is not a foregone conclusion." Investors were caught off guard by the remark.

Early on Thursday, the yield on the benchmark U.S. 10-year Treasury note rose 2.3 basis points (bps) to 4.095%, after the largest rise since June on Wednesday. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 1.8 bps at 3.604%. The availability of U.S. economic data amid the federal government shutdown, now in its 30th day, is a key question to investors.

"We may have another month in which labor market data will not be collected if the government shutdown does not end soon," said Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia. "We expect to have private data available, but it's not clear how the Fed will consider it". LeBas says the odds for a rate cut at the Fed's December 9-10 meeting are still quite high despite the lack of data. The reduction of import tariffs on products coming from China to the U.S. also may help reduce pressures, he added.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 47.3 basis points, little changed from levels late on Wednesday. The European Central Bank, meanwhile, kept interest rates unchanged for the third meeting in a row on Thursday and offered no hints about future moves as it enjoys a rare period of low inflation and steady growth, even in the face of trade turbulence. (Reporting by Tatiana Bautzer; Editing by Paul Simao)