(Adds quote, comments from Fed officials, updates prices) By Karen Brettell NEW YORK, Feb 8 (Reuters) - Benchmark U.S. Treasury yields held near 11-month highs on Monday as U.S. fiscal stimulus was seen boosting economic growth and spurring inflation, and before the Treasury Department sells new longer-dated debt. “We’ve got increased supply, a stimulus program and inflation seems to be starting to go higher,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York. President Joe Biden and his Democratic allies in Congress forged ahead with their $1.9 trillion COVID-19 relief package on Friday as lawmakers approved a budget outline that will allow them to muscle Biden"s plan through in the coming weeks without Republican support. The U.S. Treasury Department this week will also sell $126 billion in coupon-bearing debt. This will include $58 billion in three-year notes on Tuesday, $41 billion in 10-year notes on Wednesday and $27 billion in 30-year bonds on Thursday. If yields are elevated before the long-dated sales the debt should see solid demand, said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. Typically new issues, the first auctions of each quarter that are reopened in the following two months, see stronger demand, Rajappa said. “That might be one of the positives for the upcoming auctions.” Benchmark 10-year yields were last at 1.167%, after earlier reaching 1.200%, the highest since March. Thirty-year yields were last 1.953%, after earlier rising above 2% for the first time since last February. Inflation expectations jumped to the highest since 2014 with investors pricing in average annual inflation of 2.21% for the next 10 years. Analysts say that as the economy recovers from coronavirus-related business shutdowns the rise in inflation expectations could have further room to run. U.S. inflation data for January will be released on Wednesday. Consumer prices increased 0.4% in December. The closely watched yield curve between two-year and 10-year notes steepened as far as 109 basis points, the widest yield gap since April 2017. Two-year yields plumbed record lows even as long-dated yields jumped, held down by expectations that the Federal Reserve won’t raise rates for several years. “The front-end is in pretty good shape just because the Fed is not going to be tightening any time soon,” said di Galoma. U.S. monetary policy will stay accommodative for a "very long time" because the economy is far from the Fed"s goals for maximum employment and price stability, Cleveland Fed President Loretta Mester said Monday. Richmond Fed President Thomas Barkin also told the Financial Times newspaper the U.S. economy still needed support despite fears of a jump in prices. Two-year yields fell as low as 0.105%. Some investors see the possibility of a shortage of shorter-dated debt relative to demand after the Treasury Department last week slashed its borrowing projections for the first quarter due to its high cash balance. February 8 Monday 3:33PM New York / 2033 GMT Price Current Net Yield % Change (bps) Three-month bills 0.03 0.0304 -0.003 Six-month bills 0.0475 0.0482 0.002 Two-year note 100-6/256 0.1131 0.006 Three-year note 99-208/256 0.1892 0.005 Five-year note 99-126/256 0.4784 0.011 Seven-year note 99-120/256 0.8285 0.002 10-year note 97-80/256 1.167 -0.003 20-year bond 93-92/256 1.7748 -0.009 30-year bond 92-160/256 1.9529 -0.021 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.00 0.00 spread U.S. 3-year dollar swap 9.75 0.00 spread U.S. 5-year dollar swap 11.75 0.00 spread U.S. 10-year dollar swap 7.50 0.50 spread U.S. 30-year dollar swap -20.50 0.75 spread (Reporting by Karen Brettell; Editing by Nick Macfie and Andrea Ricci)