• Treasury yields moved higher last week after the Fed hinted that it may soon taper its asset purchasing program.
• A rising number of Fed officials now see a rate hike in 2022, according to projections released by the central bank last week.

U.S. Treasury yields bounced higher on Monday, continuing their upward momentum from last week as the Federal Reserve moves closer to easing off its pandemic-era policies.

The yield on the benchmark 10-year Treasury note climbed above the key 1.5% level in early trading, at one point rising above 1.51%. The yield was up by 2.8 basis points to 1.489% in afternoon trading. The yield on the 30-year Treasury bond rose 1.2 to 1.999%. Both measures are trading near their highest levels in roughly three months. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasury yields moved higher last week after the Fed hinted that it may soon taper its asset purchasing program. Additionally, a rising number of Fed officials now see a rate hike in 2022, according to projections released by the central bank last week.

"I think the big untold story of last week is the move in yields, which was pretty consistent across the board, and the bond market is starting to smell something that the equity market hasn't quite realized yet, otherwise we would see much more differentiation," Allianz chief economic advisor Mohamed El-Erian said on "Squawk Box."

New York Fed President John Williams told the New York Economic Club on Monday that the U.S. economy is close to the point where the Fed will begin to remove some of its market support.

"I think it's clear that we have made substantial further progress on achieving our inflation goal. There has also been very good progress toward maximum employment. Assuming the economy continues to improve as I anticipate, a moderation in the pace of asset purchases may soon be warranted," Williams said.

The rise in yields has also come as rising wages and supply chain issues have fueled fears of inflation. Williams said he expected inflation to come back to 2% but it could take a year.

Fed Chairman Jerome Powell is due to speak before the U.S. Senate on Tuesday and then at the European Central Bank Forum on Wednesday. Investors will likely be listening in for further clues as to when the Fed plans to reduce its bond-buying program.

On Monday, the August reading for durable goods orders showed a rise of 1.8%, coming in well above expectations thanks to a big jump in the transport sector. The prior month's reading was also revised higher.

Meanwhile, investors are also keeping an eye on the progress of the $1 trillion infrastructure bill in Washington.

House Speaker Nancy Pelosi said Sunday that she expects the bill to pass this week, but voting on the legislation may be pushed back from its original Monday timeline.

Congress must pass a new budget by the end of September to avoid a shutdown, and lawmakers must also figure out a way to increase or suspend the debt ceiling in October before the U.S. would default on its debt for the first time.

Investors will also be watching for news of turnover at the Federal Reserve. Two regional Fed presidents announced early retirements on Monday, and Powell's term expires early next year.

Auctions were held on Monday for $42 billion of 13-week bills, $42 billion of 26-week bills, $60 billion of 2-year notes and $61 billion of 5-year notes.

— CNBC's Yun Li and Jeff Cox contributed to this market report.