U.S. Treasury prices rallied on Monday as global equity prices fell amid concerns over sluggish economic growth in China and falling commodity prices, ahead of Friday's highly anticipated employment report.
The benchmark 10-year Treasury yield was down about 7 basis point at 2.09 percent, while the two-year Treasury yield was lower at 0.67 percent. When a bond price rises, its yield falls. U.S. stocks meanwhile fell about 2 percent in afternoon trading.
Treasurys
Worries about global growth have reduced investor appetite for risk and increased demand for safe-haven bonds, even as U.S. data shows a still-strengthening economy.
A 30 percent plunge in shares of mining giant Glencore traded in London, and an 8.8 percent drop in Chinese industrial firms' profits triggered the most recent investor anxiety, dragging down copper below $5,000 a ton.
"We are still trapped between the various parts of the global market that aren't doing well and expectations for good U.S. data," said Jim Vogel, an interest rate strategist at FTN Financial in Memphis, Tennessee.
Yields briefly rose from their session lows on Monday after New York Federal Reserve President William Dudley said he expects the U.S. central bank to raise interest rates this year for the first time in nearly a decade.
Dudley said he was confident that weak global economic conditions and the strong U.S. dollar would not permanently hold down inflation in the U.S., or dislodge people's expectations about the path of price increases.
Some investors have pushed back their expectations on when\ the Fed is expected to raise rates after the U.S. central bank kept rates on hold at its September meeting.
The next major focus for the market will be Thursday's manufacturing data and Friday's employment report for September, both of which, analysts said, could sway the central bank to boost rates by year-end.
The Fed left interest rates at record lows following a meeting this month that surprised markets with a dovish statement that expressed concerns about the global growth outlook.
Economic data this session included August personal income, which rose 0.3 percent, slightly below the expected 0.4 percent increase.
Pending home sales fell 1.4 percent in August and the September Dallas Fed Survey at 10:30.
The highlight of the economic calendar this week, however, is the September non-farm payrolls report on Friday. The monthly jobs data is widely viewed as the most important U.S. economic indicator.
Elsewhere, Spanish government bond yields fell 6 basis points – outperforming euro zone peers – following news that Catalan separatists won a parliamentary majority in a regional election on Sunday.