(Adds ISM data in paragraph 2, analyst note in paragraph 4) By David Randall NEW YORK, July 3 (Reuters) - Benchmark 10-year Treasury yields fell on Wednesday after growing signs of weakness in manufacturing and the jobs market suggested the U.S. economy was slowing. The ISM Non-Manufacturing index came in at 48.8 in June, well below the consensus of 52.5 and the 53.8 level in May. Initial claims for unemployment rose 238,000 in the week ended June 29, slightly above expectations of 235,000, and up from 234,000 the prior week, the Labor Department said. Data released earlier in the day by ADP showed private payrolls rose by 150,000 jobs in June, below consensus estimates of an increase of 160,000. "The economy seems to have weakened at quarter-end," said Bill Adams, chief economist for Comerica Bank. The Federal Reserve has cited the labor market's resilience in the face of interest rates at nearly two-decade highs as one reason why it has yet to cut rates. Futures markets are pricing in roughly 45 basis points in cumulative rate cuts by the end of the year. The benchmark U.S. 10-year Treasury note yield fell 8.9 basis points to 4.347%. The yield on the 30-year bond dropped 8.5 basis points to 4.524%. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 5.4 basis points to 4.685%. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes , an indicator of economic expectations, was at a negative 34.0 basis points. It had touched its least shallow inversion since May earlier in the week. The bond market will close at 2 p.m. ET ahead of the July Fourth U.S. Independence Day holiday and will reopen on Friday. (Reporting by David Randall; editing by Barbara Lewis and Richard Chang) ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters Messaging: david.randall.thomsonreuters.com@reuters.net)) Keywords: USA BONDS/ (UPDATE 1)
