U.S. government debt prices were higher on Monday, as a dramatic downturn in the Turkish lira sparked fears of a new currency crisis.
The 10-year yield topped 1.7% late last week, a 14-month high, while the 30-year yield briefly jumped above 2.5%. The sharp rise in yields followed comments from the Federal Reserve and its Chairman Jerome Powell, indicating that the central bank would allow inflation to run hotter. The 10-year yield began the year under 1%.
The latest moves come shortly after Turkish President Recep Tayyip Erdogan abruptly replaced the country's central bank chief, sending shockwaves throughout the financial markets.
The sudden departure of Naci Agbal as Turkey's central bank governor early Saturday sent the lira tumbling to lows last seen in November. The U.S. dollar was last seen trading up 10% against the Turkish lira at 7.9317.
The news is expected to have a ripple effect on other emerging markets exposed to the lira.
A host of speakers from the U.S. central bank are expected to comment on the U.S. economic outlook on Monday. Chair Powell will deliver remarks at the Bank of International Settlements Innovation Summit virtual event at 9 a.m. ET.
Richmond Fed President Thomas Barkin, San Francisco Fed President Mary Daly, Fed Vice Chair Randal Quarles and Fed Governor Michelle Bowman are also expected to participate in separate events throughout the trading session.
The U.S. Treasury is scheduled to auction $57 billion of 13-week bills and $54 billion of 26-week bills on Monday.
— CNBC's Vicky McKeever contributed to this report.