Yields higher as traders look to Wednesday auction

US Treasury yields were higher on Monday as world stock markets climbed and traders looked ahead to a Wednesday bond auction.

The benchmark 10-year yield was up 4.1 basis points at 1.6135%, continuing its increase from multiweek lows reached April 15.

Investors were watching to gauge the market's appetite for $24 billion of 20-year bonds scheduled to be auctioned on Wednesday, said Justin Lederer, Cantor Fitzgerald Treasury analyst.

Stronger economic expectations could also drive up yields on midterm five-year and seven-year notes this week, he said, but investors seem uncertain whether to resume the trends that drove the benchmark 10-year yield to 1.776% on March 30, the highest since before the COVID-19 pandemic.

"It still feels like we're trying to establish a range here," Lederer said.

World stock markets hit record highs in the European session on Monday, as markets were generally upbeat about the prospects for a global economic recovery from COVID-19, ahead of a busy week for earnings.

Coca-Cola Co trounced estimates for quarterly profit and revenue on Monday, fueled by strong demand for its sodas as vaccine rollouts and relaxed restrictions in Asia encouraged consumers to return to their pre-pandemic routines.

Overnight repurchase rates, which measure the cost of borrowing short-term cash using Treasuries or other debt securities as collateral, have turned negative in some recent cases, a trend analysts say could prompt the Fed to lift the short-term rates it manages.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 145 basis points, about 2 basis points higher than Friday's close.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was nearly unchanged at 0.1652%.