Michel Barnier, the EU's Brexit negotiator, told reporters on Monday that Britain and the bloc have reached a transition deal after a weekend of late-night negotiations.

Reuters also reported that the debate on rates among policymakers at the European Central Bank (ECB) is shifting as even some of its most dovish rate setters accept that bond buys should end this year.

"We had the Brexit item to start and then we added an extra layer," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee, noting that the ECB report indicates that "even the doves are feeling the pressure to go ahead and start thinking about when rates might be raised."

Benchmark 10-year notes fell 7/32 in price to yield 2.872 percent, from 2.848 percent on Friday.

This week's two-day Federal Reserve meeting concluding on Wednesday, when the US central bank is widely expected to raise interest rates, is the next major catalyst for markets.

Investors will be watching to see if Jerome Powell adopts a more hawkish tone in his first meeting as Fed chairman, if Fed officials change their projections for future inflation and for any indications that four rate increases this year are likely.

"People will be sensitive to any nuance that suggests that four rate hikes are possible in calendar year 2018," said Vogel.

A jump in consumer prices in January increased expectations that inflation was rising, which could spur a more hawkish Fed, though February's consumer price index last week showed prices cooled in the month.