U.S. government debt prices slipped on Monday as investors digested commentary from a key Federal Reserve official.
New York Fed President Bill Dudley said the central bank inflation should pick up as wages rise along with continuing improvement in the labor market. He also said, however, the gains in economic growth were not well distributed, adding that the central bank plans on tightening monetary policy "very judiciously."
Dudley made his remarks less than a week after the Fed raised rates for the second time this year. Investors, however, are skeptical the central bank will be able to further tighten in September. Market expectations for a September rate hike are just 13 percent, according to the CME Group's FedWatch tool.
The yield on the benchmark 10-year Treasury note sat slightly higher at 2.186 percent at 2:14 p.m. ET, while the two-year yield traded at 1.364 percent. Both yields traded lower earlier in the session. Bond yields move inversely to prices.