NEW YORK: US long-dated Treasury yields drifted higher on Monday, as Wall Street shares trimmed losses, in a lull after a hectic week when the Federal Reserve struck an upbeat tone on the US economy.

Yields had fallen earlier, in line with US stocks, as investors worried about an escalating US-China trade war.

"The drift higher in Treasury yields was step by step with the stock market coming off the lows earlier," said Lou Brien, market strategist, at DRW Trading Chicago.

After US President Donald Trump decided to push ahead with hefty tariffs on $50 billion of Chinese imports, China said on Friday it would respond with tariffs "of the same scale and strength" and that any previous trade deals with Trump were "invalid."

The official Xinhua news agency said China would impose 25 percent tariffs on 659 US products, ranging from soybeans and autos to seafood.

The tit-for-tat pushed US equities lower and dragged yields down as well.

"Trade wars are one of those things that's difficult to react to until you see the results because there's always a chance for renegotiation or a stop, or some companies changing orders, or making new decisions," DRW's Brien said.

The trade news came after the Fed raised interest rates last week by 25 basis points and signaled two more hikes this year.

In afternoon trading, US 10-year yields were up at 2.927 percent, from Friday's 2.924 percent.

US 30-year yields rose to 3.056 percent, compared with 3.047 late on Friday.

On the short end, US two-year yields were at 2.557 percent , up slightly from 2.553 percent on Friday.

The yield curve steepened, with the spread between US 2-year and 10-year notes widening to 37.7 basis points .

The trend has been toward flattening, as US rate hike expectations ramped up, boosting short-dated yields.

Some market participants believe the yield curve is on its way to inverting, a market move in which short-term US interest rates rise above longer-term bond yields. That typically has preceded recent US recessions.

But some like Justin Lederer, Treasury trader at Cantor Fitzgerald in New York, says a probable yield curve inversion does not necessarily presage a recession given the strength of the recent US economic data.