Treasuries yields rise as Iran conflict overshadows quiet data week

The 2-year note US2YT=RR yield, which typically moves in step with Fed interest rate expectations, rose 3.38 basis points to 4.249%.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 3.62 basis points to 4.634% and reached 4.640%, the highest since May 20.

The yield curve between 2- and 10-year notes US2US10=TWEB was at 38.2 basis points.

The Fed held interest rates steady at its June 16-17 meeting, but policymakers signaled they expect to raise borrowing costs later this year amid growing concern that inflation remains lodged above the central bank's 2% target.

The U.S. central bank is expected to hold rates steady again when it wraps up its two-day meeting on July 29, though traders continue to bet on a hike later in the year. Fed funds futures currently show 67% odds of a rate increase by September and an 86% probability of one by year-end.