The U.S. Labor Department said average hourly earnings fell 0.2 percent in December, falling short of analysts' forecast of a 0.2 percent gain. The initial November reading of a 0.4 percent increase was revised down to a 0.2 percent rise.

The five-year TIPS breakeven rate , which measures investors' short-term inflation expectations, fell 1.60 basis points from late Thursday to 1.16 percent, according to Tradeweb.

The 10-year TIPS inflation breakeven rate , a gauge of investors' longer-term inflation outlook, was 0.95 basis point lower at 1.60 percent.

On Tuesday, TIPS breakeven rates fell to their lowest levels since December 2010.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)