NEW YORK: US Treasury yields rose on Monday and the yield curve steepened as positive news on a coronavirus vaccine boosted expectations that the economy may be closer to returning to normal, though optimism was tempered by what is likely to be a long rollout.

Moderna Inc's experimental vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial, the company said on Monday, becoming the second US drugmaker to report results that far exceed expectations.

"It's great vaccine news but it's still not being distributed to the general public," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York. "Ultimately, I do think yields will go higher long-term, but there's still a massive recovery that needs to take place and we're not anywhere close to out of this."

Benchmark 10-year yields rose one basis point on the day to 0.906%. The yields reached an eight-month high of 0.975% last Monday, ahead of new supply of three-year, 10-year and 30-year debt as part of the Treasury's quarterly refunding.

The yield curve between two-year and 10-year notes steepened one basis point to 73 basis points.

The Federal Reserve has indicated it will shift more of its bond purchases to longer-dated debt if it views yields as rising too far relative to US economic strength.

Data on Monday showed that growth in the manufacturing sector in New York slowed in November, missing economists' expectations.

The next major US economic focus is retail sales data for October, to be released on Tuesday.

The Treasury Department will sell $27 billion in 20-year bonds on Wednesday and $12 billion in 10-year Treasury Inflation-Protected Securities (TIPS) on Thursday.