TREASURIES-US yields steady ahead of inflation data, US-China talks

By Douglas Gillison

June 9 (Reuters) - U.S. Treasury yields started the week little changed on Monday, mostly holding on to gains seen from a selloff last week prompted by an unexpectedly strong May jobs report.

The employment data reported by the Labor Department on Friday bolstered the view that the U.S. economy will prove more resilient than feared while the outcome of the Trump administration's multi-front trade war remains uncertain.

The outlook was poised to shift yet again with top U.S. and Chinese officials scheduled to meet Monday in London to try to reach a settlement in a widening trade dispute that threatens supply chains and global growth.

Investors are also expecting a batch of inflation and consumer sentiment data as well as auctions of 10- and 30-year Treasuries later in the week.

Stan Shipley, fixed income strategist at Evercore ISI in New York, said investors were bracing for an uncomfortably strong consumer price index report on Wednesday.

"I think most people are expecting a kind of disheartening core reading here after several months of low readings," he said.

"The influence of tariffs is starting to be felt in consumer prices," he added. "A lot of things that have held down core readings are not going to be replicated this month."

Yields on the benchmark U.S. 10-year Treasury note US10YT=TWEB were last down 1.2 basis points to 4.498%. The yield on the 30-year bond US30YT=TWEB rose 1.1 basis points to 4.974%.

The curve between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 48.0 basis points.

Economic data on Monday from the Commerce Department showed wholesale inventories rose 0.2% in April, versus a consensus expectation by economists polled by Reuters that they would remain unchanged.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations, fell 2.7 basis points to 4.016%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.357% after closing at 2.359% on Friday.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.317%, indicating the market sees inflation averaging about 2.3% a year for the next decade.