US Treasury Yields Rise Ahead of Key Inflation Data

U.S. Treasury yields were higher on Tuesday as investors look ahead to key inflation data released on Thursday. Yields defied a fall in oil prices as trade resumed following Friday's public holiday.

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — rose over 3 basis points to 4.483%.

The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, was over 3 basis points higher at 4.213%. The longer-dated 30-year Treasury bond yield rose over 1 basis point to 4.919%.

One basis point is equal to 0.01%, and yields and prices move in opposite directions.

A key test for the market this week will be the Thursday release of May's reading on the personal consumption expenditures price index, the Fed's preferred inflation gauge. Even excluding volatile food and energy prices, core PCE is expected to increase from April, according to economists polled by FactSet.

Last week's Fed meeting, the tone of which proved more hawkish than many market watchers had been expecting, saw expectations for interest rate hikes pulled forward to as soon as October. Investors are now laser-focused on any inflation reading that could signal the U.S. central bank may soon begin hiking rates.

Last Wednesday, Kevin Warsh's first gathering as Federal Reserve chairman ended with a more hawkish bias toward interest rates from the 12 voting members of the Federal Open Market Committee, and a nod to possible future rate hikes. The meeting saw the committee remove key language from a dramatically shorter policy statement that had previously indicated a bias toward future rate cuts.

The Fed kept the benchmark federal funds rate unchanged at 3.5%-3.75%.

— CNBC's Sean Conlon also contributed to this report.