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Treasury Yields Rise to Start the Holiday-Shortened Week

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U.S. Treasury yields rose on Monday to start the holiday-shortened week, with the 10-year yield hovering above 1.7%.

The yield on the benchmark 10-year Treasury note rose to 1.71% at around 4:00 p.m. ET. The yield on the 30-year Treasury bond rose to 2.41%. Yields move inversely to prices.

Treasury yields have been rising rapidly recently over concerns about possible inflation growth amid the economic recovery from the coronavirus pandemic. However, data out Friday for the personal consumption expenditure price index, showed muted price inflation in February.

Ben Jones, senior strategist at State Street Global Advisors, told CNBC's "Squawk Box Europe" on Monday that concerns around inflationary pressures would continue to be the "major story for the coming months" and thought that the bond market was "testing the resolve of the (Federal Reserve)."

Fed Chairman Jerome Powell said earlier this month that the central bank did expect inflation to rise this year but said this "transitory rise" would not be enough for the Fed to adjust its policy.

"I personally wouldn't be betting against the Fed," Jones said, agreeing that while there would be higher levels of inflation over the summer as economies re-open, it would "start to drift a little bit lower over the back end of this year."

However, Jones didn't believe inflation would return to a "low point," given the money that both households and corporates will have saved up to spend following the pandemic. So he, therefore, believed that inflation would be "slightly higher" than it has been in the last few years but not "rampant."

Investors will be keeping an eye out for updates on President Joe Biden's infrastructure plan, which could cost north of $3 trillion. The president is expected to unveil his plan when he travels to Pittsburgh on Wednesday.

Fed Governor Christopher Waller is due to make a speech virtually on Federal Reserve independence Peterson Institute for international economics discussion, at 11 a.m. ET on Monday.

Auctions will be held Monday for $57 billion of 13-week bills and $54 billion of 26-week bills.

CNBC's Yun Li contributed to this report.

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