(Updates yields, adds analyst comments) By Karen Pierog CHICAGO, Aug 9 (Reuters) - U.S. Treasury yields rose on Monday as record-high job openings on top of stronger-than-expected employment gains in July added to the narrative of an improving labor market. The benchmark 10-year yield, which hit its highest level since July 16 at 1.324%, was last up 2.9 basis points at 1.317%. On Friday, it climbed to a two-week high of 1.305% after July"s solid employment report was seen as moving the U.S. Federal Reserve closer to a policy decision on unwinding stimulus measures put into place last year to combat the economic fallout from the coronavirus pandemic. Job openings, a measure of labor demand, shot up by 590,000 to a record-high 10.1 million on the last day of June, the U.S. Labor Department reported on Monday in its monthly Job Openings and Labor Turnover Survey (JOLTS). That report brought yields off their lows, according to Lou Brien, a market strategist at DRW Trading in Chicago. "The yield high on Friday was tested early this morning, and the level held," he said. "But the move generated by the JOLTS pushed the yield above that key level." Comments by Fed officials about cutting bond purchases "sooner rather than later" were also lifting yields, said Andrew Richman, senior fixed income strategist at Sterling Capital Management. On Monday, Atlanta Federal Reserve Bank President Raphael Bostic said he is eyeing the fourth quarter for the start of a bond-purchase taper but is open to an even earlier start if the job market keeps up its recent torrid pace of improvement. Meanwhile, the market was awaiting Wednesday"s release of Consumer Price Index (CPI) data for July. "Last week was all about jobs; this week is all about inflation," said Bill Merz, chief fixed income strategist at U.S. Bank Wealth Management, adding that "inflation data that surprises to the upside" could push yields higher. In June, consumer prices increased 0.9%, the largest gain in 13 years, after advancing 0.6% in May. In the 12 months through June, the CPI jumped 5.4%, the largest increase since August 2008. Merz said the market is in general agreement with the Fed about inflation remaining relatively transitory, but sees impediments to real economic growth. "If we start to see data that challenges either one of those narratives, that"s what we expect to move Treasury yields. We got some of that on Friday when we had a very strong jobs report that implied higher growth potential, so yields rose," he said. On Tuesday, the U.S. Treasury will auction $58 billion of three-year notes, followed by $41 billion of 10-year notes on Wednesday and $27 billion of 30-year bonds on Thursday. "Given the absolute level of yields right now, how low they are, it"s going to be a little tougher than normal I guess to move things here," Richman said. Goldman Sachs and JP Morgan have cut their targets for the 10-year yield at year end to 1.6% and 1.75%, respectively. The two-year Treasury yield was last up 1.2 basis points at 0.2203%. A closely watched part of the yield curve that measures the gap between yields on two- and 10-year Treasury notes was last less than a basis point steeper at 109.50 basis points. August 9 Monday 3:23PM New York / 1923 GMT Price Current Net Yield % Change (bps) Three-month bills 0.05 0.0507 0.000 Six-month bills 0.05 0.0507 0.000 Two-year note 99-208/256 0.2203 0.012 Three-year note 99-218/256 0.426 0.021 Five-year note 99-50/256 0.7903 0.026 Seven-year note 99-92/256 1.0957 0.028 10-year note 102-208/256 1.317 0.029 20-year bond 106-52/256 1.8729 0.032 30-year bond 109-60/256 1.9637 0.031 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 8.75 -0.75 spread U.S. 3-year dollar swap 11.75 -0.75 spread U.S. 5-year dollar swap 9.00 0.00 spread U.S. 10-year dollar swap 1.25 -1.00 spread U.S. 30-year dollar swap -28.25 -1.75 spread (Reporting by Karen Pierog in Chicago Editing by Alistair Bell and Matthew Lewis) Our Standards: The Thomson Reuters Trust Principles.