(Recasts, updates yields, adds comments from analyst and Fed official) By Karen Pierog Feb 16 (Reuters) - The 10-year U.S. Treasury yield rose above 1.3% for the first time in nearly a year on Tuesday and the yield curve steepened as expectations of extended fiscal and monetary stimulus alongside hopes of an economic upswing added momentum to the reflation trade. The benchmark yield, which reached 1.309%, its highest level since Feb. 27, 2020, when the Coronavirus pandemic was beginning to affect markets, was last up 9.9 basis points at 1.2989%. The 30-year U.S. yield also rose, touching a one-year high of 2.095%. It was last 8.1 basis points higher at 2.0853%. "The market is simply looking at the pace of recovery, the pace of the vaccine rollout, and the size of the stimulus package, along with an easy (U.S. Federal Reserve) and saying, "Well, the Fed can sit on the short end, but the long end is going to really reflect the expectation for stronger growth, higher inflation down the road,"" said Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research in New York. Back from Monday"s Presidents Day holiday, Treasuries were catching up with a global bond sell-off, with German 10-year yields hitting an eight-month high on Tuesday. U.S. President Joe Biden has been drumming up support for a $1.9 trillion coronavirus relief package. Meanwhile, optimism about vaccine rollouts has lifted stocks and commodity prices globally at the expense of safe-haven assets like Treasuries. Guy LeBas, chief fixed income strategist at Janney Capital Management in Philadelphia, said a temporary absence of Asian investors was also a negative factor for Treasuries. "What we"ve seen over the last several months has been buying out of Asia and, much of Asia markets are quiet right now for the (Lunar New Year) holiday," LeBas said. Another likely factor in the Treasuries sell-off was convexity hedging by mortgage-backed securities investors seeking to reduce risk on loans to counter the negative effects of slower loan payments when interest rates climb. "I"ve got to say there must be some of that going on right now," Jones said. While long-dated Treasury yields have soared, the two-year yield has been anchored by expectations the Fed will keep policy rates near zero for years to come. A closely watched part of the yield curve, which measures the gap between yields on two- and 10-year Treasury notes , steepened to as much as 118.43 basis points, its widest level since 2017. It was last up 8.54 basis points at 118.26 basis points. The spread between five-year notes and 30-year bonds grew to as much as 155.35 basis points - the widest since 2015. It was last at 152.43 basis points. The view that the Fed may let the economy run hot has pushed 10-year inflation expectations to their highest since 2014, with the Treasury Inflation-Protected Securities (TIPS) breakeven inflation rate last at 2.245%. Official talks about tapering Fed bond buying, which could begin in the second half of 2021, pose a potential downside risk to breakeven rates, analysts at Cornerstone Macro said in a research report on Tuesday. "That could signal to investors, first that a large buyer in the market is about to become smaller and eventually disappear, and second that the Fed’s resolve to overshoot on inflation may not be very strong, depending on what the outlook for inflation will be at that time," the report said. Federal Reserve Bank of Kansas City President Esther George said on Tuesday the central bank"s debate over bond purchases will commence when it is clear the Fed is on track to meet its inflation and employment goals. Ahead of the U.S. Treasury"s $27 billion, 20-year bond auction on Wednesday, the 20-year yield was last up 9.1 basis points at 1.9141%. February 16 Tuesday 3:41PM New York / 2141 GMT Price Current Net Yield % Change (bps) Three-month bills 0.04 0.0406 0.000 Six-month bills 0.055 0.0558 0.000 Two-year note 100-2/256 0.121 0.010 Three-year note 99-178/256 0.2272 0.034 Five-year note 99-22/256 0.5624 0.077 Seven-year note 98-196/256 0.9338 0.094 10-year note 98-96/256 1.2989 0.099 20-year bond 91-44/256 1.9141 0.091 30-year bond 95-84/256 2.0853 0.081 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 9.25 0.00 spread U.S. 3-year dollar swap 9.50 -0.50 spread U.S. 5-year dollar swap 12.25 0.00 spread U.S. 10-year dollar swap 8.75 1.50 spread U.S. 30-year dollar swap -19.25 1.25 spread (Reporting by Karen Pierog in Chicago, additional reporting by Sujata Rao and Abhinav Ramnarayan in London and Kevin Buckland in Tokyo; Editing by Chizu Nomiyama, Nick Zieminski and Jonathan Oatis)