U.S. Treasury yields resumed their march higher on Monday, with 10-year yields hitting their highest level in three months on solid economic data and signals the Federal Reserve is shifting towards a more hawkish policy.
The 10-year Treasury yield rose as high as 1.516% in morning trading, its first time above 1.5% since June 29, and was last up 2.4 basis points at 1.4854%.
The benchmark note's yield rose almost 9 basis points last week, the fifth week of gains and the biggest weekly jump since March, as investors reacted to hawkish shifts by major central banks including the U.S. Federal Reserve and the Bank of England.
Across the curve, most other Treasury yields were higher on the day on Monday with 30-year yields rising above 2% for the first time since mid-Augus.
Analysts said the continued selloff in bond markets was likely driven by position adjustments and a reassessment of the inflation outlook.
Jim Barnes, director of fixed income at Bryn Mawr Trust, said a strong Commerce Department report on durable goods Monday morning contributed to traders' risk-on sentiment.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.5% last month, the department said. Economists polled by Reuters had forecast core capital goods orders increasing 0.4%.
"Today's continuing rise in yields was the economic picture catching up to the central bank news we got from last week," Barnes said.
The Fed has said it will start to reduce its bond purchases as soon as November if the economy continues on its current track.
The yield on the two-year U.S. Treasury note, seen as a sign of inflation expectations, was up less than a basis point at 0.2799% in morning trading.
(Reporting by Dhara Ranasinghe; editing by Sujata Rao; Editing by Bernadette Baum) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))