The yield on the benchmark 10-year Treasury note is on track for its biggest weekly rise since March as reflation has regained its appeal after President Joe Biden and members of Congress finalised a $579 billion bipartisan infrastructure deal.

The yield rose as much as 5 basis points to above 1.54 per cent in trading in New York on Friday and rose 10 basis points throughout the week. Other drivers include a sharper fall in European government bonds triggered by supply and the need to sell US Treasuries to hedge the corporate bond issuance schedule next week.

The Treasury yield curve steepened and continued to rebound from the strong leveling after the Federal Reserve meeting on June 16. The announcement of the Fed meeting suggests that monetary policy tightening is likely to start earlier. The yield difference between five-year and 30-year bonds reached nearly 124 basis points. The spread fell below 108 basis points on June 21, the lowest since August last year.

The curve is overcoming the flattening trend at the end of the month-the index rebalancing at the end of the month creates a demand for duration, especially when there are no coupons issued in the first few days at the end of the month.

"the month-end extension is coming next week, and the weakness at the long end is a bit unexpected," said Thomas Roth, head of interest rate trading at SMBC Nikko Securities. The increased likelihood of passage of the infrastructure plan seems to be "re-inflating the trade."