(Updates yields, adds context, fresh quote in paragraphs 1-2, 4-5 and 10-14) * Group of Fed speakers to get extra scrutiny amid data absence * Upcoming auctions and consumer sentiment data * Private data suggest labor market not quickly deteriorating, Shipley says WASHINGTON, Oct 6 (Reuters) - Benchmark U.S. yields were hanging on to slender gains heading into Monday's close as the sixth full day of a government shutdown deprived investors of crucial economic data and left markets mostly directionless amid softening demand. Spillover from selloffs on sovereigns caused by political turbulence in Japan and France likely added to buyer hesitancy in the United States, observers said. The higher yields on two- and 10-year Treasuries added to Friday's gains, when the U.S. Labor Department missed September's report on the employment situation, a key indicator that has pointed to weakness in recent months in the world's largest economy. "We can see that the activity started overseas last night with the reopen of Japanese markets following the new prime minister selection," said Guy LeBas, chief fixed income strategist at Janney. Meanwhile, U.S. markets for the time being would have little else to nudge them out of their current range-bound trading until Congress resumes funding the federal government and it returns to producing economic data, LeBas said. Data produced in the private sector, one of the few bits and pieces investors have to go on at the moment, point to a labor market that remains somewhat stable for now, according to Stan Shipley, managing director for fixed income at Evercore ISI. Public remarks this week from members of the Fed's policy-setting Federal Open Market Committee should garner unusual scrutiny in assessing the likelihood of another cut in interest rates at the Fed's October 28-29 meeting, according to Shipley. Those making appearances on Tuesday alone include Fed Vice Chair for Supervision Michelle Bowman and newly installed fellow Governor Stephen Miran. Kansas City Fed President Jeff Schmid is set to deliver remarks after Monday's close. The picture of demand for U.S. debt is due to broaden later in the week with auctions for three, 10- and 30-year U.S. notes and bonds. The University of Michigan is also due to update its consumer sentiment data series on Friday. The yield on the benchmark U.S. 10-year Treasury note was last up 4.7 basis points to 4.166%. The yield on the 30-year bond rose 4.7 basis points to 4.761%. 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 56.5 basis points. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, rose 2.7 basis points to 3.599%. The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) was last at 2.412% after closing at 2.404% on October 3. The 10-year TIPS breakeven rate was last at 2.346%, indicating the market sees inflation averaging about 2.3% a year for the next decade. (Reporting by Douglas Gillison in Washington, Editing by Louise Heavens and Will Dunham) ((douglas.gillison@thomsonreuters.com; (202) 843-6247; Signal: DGTR.44)) Keywords: USA BONDS/ (UPDATE 1)
