TREASURIES-US yields down slightly to start quiet New Year's week

(Updates throughout with latest market activity)

By Matt Tracy

Dec 29 (Reuters) - Treasury yields ticked down to start the final week of 2025, as the market watches for any major signs of the U.S. economy's state. The yield on 10-year Treasury notes was down ?two basis points (bp) from Friday's close to 4.114%.

The yield on the 30-year Treasury bond was last down ?1.5 bps to 4.803%.

The two-year U.S. Treasury yield, which typically moves in ?step with interest rate expectations, was last down 2 bps ?at 3.462%.

The U.S. ?dollar 5-year forward inflation-linked swap , seen by some as a better gauge of inflation expectations due ?to possible distortions caused by the ?Fed's quantitative easing, was last at 2.444%. The decline in yields comes after data showing contracts to purchase previously owned U.S. ?homes unexpectedly shot to the highest in ?nearly three ?years in November, as improving affordability conditions drew in buyers, the National Association of Realtors said on Monday.

Pending home sales rose 3.3% last ?month after an upwardly revised 2.4% gain in October, the NAR said. Economists polled by Reuters had forecast contracts rising 1%.

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 64.9 ?bps.

Market odds of a cut in a key interest rate at the Federal Reserve's January meeting were last at 18.8%.

Market participants ?are watching closely for any key data points that could point to a rate cut in January. This will likely come in January with the next major inflation and jobs reports.

"We'll have to wait until January to get first-tier data that might move the needle or speeches from key members of the (Federal Open Market Committee)," ?said Eric Winograd, director of developed market economic research at AllianceBernstein.

New York Fed data on Monday showed the Fed's standing repo facility was tapped for $25.95 billion, the third highest usage this ?year. (Reporting by Matt Tracy in Washington, Editing by Chizu Nomiyama and Andrea Ricci )