TREASURIES-US bonds retreat as strong data cements Fed rate-cut pause

(Adds new comment, details of ADP, retail sales data, Trump's remarks)

* ISM manufacturing PMI hits highest level since August 2022

* Prices-paid index jumps to 78.3, highest since June 2022, amid supply chain issues

* US rate futures shift from pricing hikes to modest easing

* Trump says US will end war in Iran

By Gertrude Chavez-Dreyfuss

NEW YORK, April 1 (Reuters) - U.S. Treasuries opened the second quarter on a weaker note on Wednesday, reversing recent gains after a round of data pointed to the resilience of the world's largest economy and reinforced expectations the Federal Reserve will keep interest rates higher for longer. U.S. private payrolls for March and retail sales for February came in higher than expected, while a U.S. manufacturing report showed that a measure of prices paid by factories for inputs surged to its highest level in nearly four years.

Investors also sold safe-haven Treasuries as risk appetite improved after President Donald Trump told Reuters on Wednesday the U.S. will end its war against Iran fairly soon and could return for "spot hits" if needed. He is scheduled to address the nation at 9 p.m. EDT on Wednesday (0100 GMT on Thursday).

Stocks rallied after the Trump comments, while U.S. crude futures slid 2% to just below $100 per barrel.

In mid-morning trading, U.S. 10-year yields, which rise when Treasury prices fall, were last up 1.6 basis points at 4.327%. They advanced by 37 bps in March, their largest monthly increase since December 2024.

On the front end of the curve, the two-year yield, which reflects interest rate expectations, was up 1.2 bps at 3.811% . The yield climbed 43 bps last month, its biggest monthly rise since October 2024.

Private employment rose by 62,000 jobs in March, according to the ADP's national employment report, underscoring steady labor market gains after an upwardly revised increase of 66,000 in February. A Reuters poll of economists had forecast a gain of 40,000 jobs.

U.S. retail sales also showed renewed strength in February, lifted by a rebound in vehicle purchases. Sales climbed 0.6% after a revised 0.1% slip in January, exceeding expectations for a 0.5% rise. Retail sales, which largely track goods purchases and are not adjusted for inflation, had previously been reported to have fallen 0.2% in January.

David Rosenberg, an economist and the founder of Rosenberg Research, noted that based on the real retail sales data, which is adjusted for inflation, the "build in" for the first quarter is "running negative around 1%."

STRONG MANUFACTURING DATA Treasury yields pushed higher after fresh data signaled renewed strength in U.S. manufacturing. The Institute for Supply Management said its manufacturing PMI rose to 52.7 last month, the strongest reading since August 2022, from 52.4 in February.

Price pressures also intensified. The survey's prices-paid index jumped to 78.3, the highest reading since June 2022, from 70.5 in February, as supply chain disruptions drove input costs higher.

Rosenberg said bonds sold off after the economic data, adding that the move was not surprising.

"But when real sales are running negative in a given quarter, it is tough to build a view that Treasury yields won't go down ... we still believe they will."

U.S. 30-year yields rose 1.1 bps to 4.904%. In March, 30-year yields were up 27 bps, marking their best monthly advance since December 2024.

The yield curve flattened a touch on Wednesday, with the gap between two-year and 10-year yields narrowing to 51.2 bps , compared with 52 bps late on Tuesday.

The curve has bull-steepened over the last three sessions, a pattern in which yields on short-dated notes are falling faster than those on longer-term maturities. That trend reflects a view that rate cuts are back on the horizon for 2026.

U.S. rate futures on Tuesday priced in about 7 bps of easing, a turnaround from the 10 bps of hikes reflected earlier this week, according to LSEG estimates. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrew Heavens and Paul Simao)