Bond investors are creating a divide within the Treasury market as they prepare for slower economic growth and higher inflation. This has led to a surge in demand for short-term Treasuries at lower yields, while longer-term yields are gradually rising. The market is expecting upcoming data on Friday to confirm persistent inflation.

Last week, five-year yields dropped by eight basis points and broke the 4% mark following reduced forecasts for US economic growth by Federal Reserve policymakers. This fueled speculation on potential interest rate cuts. On Friday, 30-year bond yields rose, surpassing five-year yields by almost 60 basis points, marking the widest gap since September.

One of the key events in this week's busy economic calendar is the release of personal income and spending data for February on Friday. This report includes the Fed's targeted inflation rate of 2% in the long term, which stood at 2.5% in January. Economists predict it will remain at this level, while the core rate, excluding food and energy, is expected to increase to 2.7% from 2.6%.

Additionally, this week features the completion of the last Treasury coupon auctions for the month, totaling $183 billion in new two-, five-, and seven-year notes.