CORRECTED-TREASURIES-Yields jump after strong ISM, jobs data suggest economy growing

(Replaces 'prices' with 'yields in the third paragraph.) By David Randall NEW YORK, Feb 3 (Reuters) - U.S. Treasury yields jumped higher on Friday after data that showed job growth surged and services activity rebounded in January, further complicating the Federal Reserve's attempts to slow the economy to bring inflation down. The yield on 10-year Treasury notes was up 13 basis points to 3.528%, erasing price gains for the week. The yield on the 30-year Treasury bond was up 8.5 basis points to 3.640%. Bond prices move in the opposite direction of yields. "We’ve been saying for a little while that maybe yields have come in too far too soon and that a selloff in rates would make a lot of sense," said Lawrence Gillum, fixed income strategist for LPL Financial. "In the near term it’s hard to see that a recession will be imminent, but it increases the risk of a policy error if the Fed does have to go higher for longer." Job growth and wages are the chief concerns for the Fed in its attempt to lower inflation down to its 2% target rate after inflation surged to 40-year highs last year. Average hourly earnings rose 0.3% after gaining 0.4% in December, bringing the year-on-year increase in wages to 4.4% from 4.8% the month before. "Even with stronger-than-expected headline numbers, we saw wage growth come down," said Sam Millette, fixed income strategist for Commonwealth Financial Network. "There are some signs of a sort of Goldilocks scenario for the Fed here where they aren't seeing the large increase in unemployment that's associated with tighter monetary policy, but they are seeing wage growth starting to slow." Non-farm payrolls surged by 517,000 jobs last month, the Labor Department said. Economists polled by Reuters had forecast payrolls increasing 185,000 and wages advancing 4.3% year-on-year The unemployment rate fell to 3.4% from December's 3.5%. The Institute for Supply Management (ISM) said on Friday its non-manufacturing PMI increased to 55.2 last month, above the 50.4 reading expected by economists polled by Reuters. The index dropped to 49.2 in December, falling below the 50 level, which signals contraction, for the first time since May 2020. 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 -75 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 15.9 basis points at 4.249%. February 3 Friday 10:26AM New York / 1526 GMT Price Current Net Yield % Change (bps) Three-month bills 4.545 4.6593 0.019 Six-month bills 4.66 4.8362 0.051 Two-year note 99-187/256 4.2678 0.178 Three-year note 99-214/256 3.9339 0.170 Five-year note 99-80/256 3.652 0.169 Seven-year note 99-96/256 3.6019 0.162 10-year note 104-216/256 3.5339 0.136 20-year bond 103-8/256 3.7806 0.112 30-year bond 106-104/256 3.6453 0.090 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 26.00 -1.75 spread U.S. 3-year dollar swap 14.50 -0.75 spread U.S. 5-year dollar swap 6.25 -1.00 spread U.S. 10-year dollar swap -2.25 -1.50 spread U.S. 30-year dollar swap -37.25 -2.25 spread (Reporting by David Randall; Editing by Arun Koyyur and Andrea Ricci)