US yields slide as market eyes inflation data, US-China talks

• Investors brace for strong consumer price index report
• US-China trade talks could impact global growth
• Yields on 10-year Treasury note slightly down

June 9 (Reuters) - U.S. Treasury yields were modestly lower on Monday afternoon, after rising on Friday following an unexpectedly strong May jobs report.

The uptick in demand for Treasuries came ahead of planned auctions for three-, 10- and 30-year U.S. notes and bonds this week and U.S. inflation data on Wednesday. U.S. and Chinese officials also met in London for trade negotiations.

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

"There's no risk-off move, what with equities doing all right on the day," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

LeBas added that he expected "cautious demand" at this week's auctions but that inflation data for May was likely to be a little warmer.

"This is really the first period in which firms had the opportunity to adjust prices for the tariffs," he said.

Economists are expecting Wednesday's Consumer Price Index data to show the core rate rose 0.1 point year over year to 2.9%, according to a Reuters poll. This would mark a reversal in the slowing trend recorded since January and could weigh on chances the Federal Reserve will cut interest rates soon.

Futures markets suggest investors believe the Fed is unlikely to cut rates before September's Fed meeting.

Yields on the benchmark U.S. 10-year Treasury note US10YT=TWEB were last down 3.6 basis points to 4.474%. The yield on the 30-year bond US30YT=TWEB fell 1.6 basis points to 4.947%.

Bond yields move inversely to prices, meaning they rise when demand weakens.

The curve between yields on two- and 10-year Treasury notes US2US10=TWEB, seen as an indicator of economic expectations, was at a positive 47.3 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 4.6 basis points to 3.997%.

The breakeven rate on five-year U.S. Treasury Inflation-Protected Securities (TIPS) US5YTIP=TWEB was last at 2.350% after closing at 2.359% on Friday.

The 10-year TIPS breakeven rate US10YTIP=TWEB was last at 2.312%, indicating the market sees inflation averaging about 2.3% a year for the next decade.