TREASURIES-US yields slightly lower after data as trade talks eyed

By Chuck Mikolajczak

NEW YORK, June 3 (Reuters) - Longer-dated U.S. Treasury yields were mostly lower on Tuesday, as investors awaited updates on tariff talks and budget negotiations, but they were off earlier lows after a report on the labor market.

The White House said on Monday that U.S. President Donald Trump was likely to speak with Chinese leader Xi Jinping, days after Trump accused China of violating a deal to roll back tariffs and trade restrictions.

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a self-imposed deadline in just five weeks, according to a draft letter to negotiating partners seen by Reuters.

"There could be a breakdown in any of the major trade negotiations in any five-second period of time," said Todd Walsh, CEO and Chief Technical Analyst at Alpha Cubed Investments in Costa Mesa, CA.

"As lightly as we've taken them in the last couple of weeks, they may work out and everything may go to a detente and some stabilization, but you can see a lot of dislocation before we get to that point."

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB fell 2 basis points to 4.442% and was on track for its third decline in four sessions.

Yields pared declines after the Labor Department said its Job Openings and Labor Turnover Survey, or JOLTS report, showed openings, a measure of labor demand, rose 191,000 to 7.391 million by the last day of April, but layoffs rose in a sign of slowing.

The data is the first in a string of reports on the labor market this week, culminating with Friday's government payrolls report.

The yield on the 30-year bond US30YT=TWEB fell 2.9 basis points to 4.966%.

Many Fed officials have indicated a patient approach to determine the effect the levies may be having on prices, although they have also indicated rate cuts may still be possible this year.

Atlanta Federal Reserve President Raphael Bostic said on Tuesday a strong economy gives the U.S. central bank time to weigh how tariffs will impact inflation and growth, while remaining open to the possibility of a single interest rate cut at some point later this year.

Other Fed policymakers scheduled to speak on Tuesday are Bank of Chicago President Austan Goolsbee, Governor Lisa Cook and Bank of Dallas President Lorie Logan.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 48.7 basis points.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, rose 0.8 basis points to 3.953%.

Investors were also eyeing negotiations in Congress over a sweeping budget package that contains many of Trump's priorities, including tax cuts along with cuts to healthcare.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.390% after closing at 2.397% on Monday.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.34%, indicating the market sees inflation averaging about 2.3% a year for the next decade.