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Investors brace for strong consumer price index report

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US-China trade talks could impact global growth

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Yields on 10-year Treasury note slightly down

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

were last down 1.2 basis points to 4.498%. The

yield on the 30-year bond rose 1.1 basis points to

4.974%.

The curve between yields on two- and 10-year Treasury notes

, 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 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) was last at

2.357% after closing at 2.359% on Friday.

The 10-year TIPS breakeven rate was last at

2.317%, indicating the market sees inflation averaging about

2.3% a year for the next decade.