NEW YORK (CNNMoney.com) - Treasury prices edged lower Monday as investors braced for another key inflation reading slated for release Tuesday and potentially another rate hike by the Federal Reserve.

The dollar climbed against the euro, extending its rally and was slightly higher against the yen.

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The 10-year note fell 1/32 to 101-03/32, yielding 4.98 percent, up from 4.97 percent Friday. The benchmark yield was just below the yield on the two-year note, resulting in an inverted yield curve.

Yield curve inversions in the past have been considered possible signs of impending recessions, but that is considered less reliable since the curve has inverted on and off over the last 11 months.

The 30-year bond fell one tick to 91-30/32 to yield 5.02 percent, relatively unchanged from the previous session. Bond prices and yields move in opposite directions.

The five-year note also fell one tick, yielding 4.95 percent, while the two-year note fell one tick to yield 5.02 percent.

With no major economic data on tap, Treasurys slipped following earlier comments by Cleveland Fed President Sandra Pianalto, who echoed her central bank peers' recent hawkish remarks saying that a sustained increase in core consumer prices "if sustained, exceeds my comfort level".

Worries about whether the Federal Reserve will have to continue raising interest rates to fight inflation have rattled markets recently and sent investors to seek safety in Treasurys recently, as investors fear that if monetary policy goes too far it could crimp economic growth.

Investors have speculated that another interest rate hike is very likely when the central bank meets again at the end of June after Chairman Ben Bernanke stressed the importance of tackling inflation in a speech delivered last Monday.

But investors are largely focused on two key reports due out this week - Tuesday's PPI report and Wednesday's CPI report. (Full story) - where they are expected to glean some insight into inflationary pressure within the economy.

Bond traders fear inflation since it erodes the value of the fixed-income paying investment.

Other Fed officials who spoke Monday, including Fed Board Governors Mark Olson and Susan Schmidt Bies, avoided discussing the economy on Monday. Bernanke is scheduled to speak to a group of bankers at 7:30 p.m. ET.

In currency trading, the dollar gained against the euro and the yen.

The euro bought $1.2603, down from $1.2640 Friday. The dollar traded at ¥114.24, up from ¥113.99 in the previous session.

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