NEW YORK, March 3 (Reuters) - The U.S. bond market's gauges on investors' inflation expectations briefly pared their initial gains on Thursday after the government revised lower its reading on fourth-quarter labor costs, while analysts expected a slight upward revision.
Traders have bet that an improving labor market would begin boosting wage pressure, propelling domestic inflation towards the Federal Reserve's 2 percent goal.
The Labor Department on Thursday said it downgraded the increase in unit labor costs in the fourth quarter to 3.3 percent, from an earlier 4.5 percent gain. Economists polled by Reuters had projected an upward adjustment to a 4.7 percent rise.
The yield premiums on regular U.S. Treasuries over Treasury Inflation Protected Securities, known as inflation breakeven rates, have climbed from their lowest levels since early 2009 as oil prices have moved from 12-year lows set in February.
The five-year TIPS breakeven rate last traded at 1.35 percent, up 0.7 basis point from late on Wednesday and hovering at its highest level since late July, according to Tradeweb.
The 10-year TIPS breakeven rate was up nearly 1 basis point at 1.53 percent, holding near its highest in seven weeks.
(Reporting by Richard Leong; Editing by Bernadette Baum)