US Treasury yields higher on housing data

U.S. government debt prices fell on Monday after the release of housing market data.

The National Association of Homebuilders housing index for May dropped 2 points and now stands at 54. Fifty is the line between positive and negative sentiment.

"Bottom line, new home sale trends remain so far below historically averages that there is huge runway for future growth. That said, and I'll say for the umpteenth time, until the first time household is more interested than buying instead of renting, the so called 'pent up demand' will remain just that, pent up," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

April housing starts figures are due on Tuesday, followed by existing home sales numbers on Thursday.

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But the likely data highlight of the week will be Friday's inflation data for April, expected to show the headline rate unchanged. The U.S. Federal Reserve will also publish minutes on Wednesday.

Benchmark 10-year Treasury note yields, which move inverse to prices, climbed to 2.2214 percent on Monday and traded as high as 2.2373 percent.

Thirty-year U.S. bond yields were also higher, trading at 3.0127 percent and traded as high as 3.0307percent.

The run of soft economic data in the first quarter has spilled into the second quarter, with some disappointing misses in the past week in retail sales, producer price inflation data, industrial production and consumer sentiment.

Those misses helped push market expectations for a first Fed rate hike past December and into January, with fewer market players now betting on a September rate increase.

In Europe, German bund yields also ticked higher, with the 10-year trading around 0.65 percent Monday. Treasury yields have sold off in recent weeks, following heavy selling in German bunds over fears of the longevity of the European Central Bank's bond-buying program.

Greek bond yields also spiked as the country's precarious finances and reluctance to carry out reforms suggested it would struggle to make a key debt payment due next month.

—CNBC's Diana Olick and Reuters contributed to this report.

Correction: This story has been updated to reflect that builder confidence fell two points in May to 54.