U.S. government debt prices were little changed on Monday with benchmark yields near their lowest levels in about 1-1/2 weeks on the Federal Reserve's purchase of long-dated bonds and safe-haven bids due to weaker stock prices.
The bond market's early gains were limited by caution on possible hints from Fed Chairman Ben Bernanke on the central bank's latest stand of quantitative easing ahead of its policy meeting at the end of the month.
"Some accounts were getting long going into this week. You had some hedge funds buying earlier,'' said Carl Lantz, chief U.S. interest rate strategist with Credit Suisse in New York.
On Monday, the Fed bought $1.47 billion in Treasurys with maturities ranging from February 2036 to November 2042, which was a part of its $45 billion monthly purchases of government securities aimed to lower unemployment.
The U.S. central bank has also been buying $40 billion in mortgage-backed securities per month since September with the goal of stimulating the housing market, whose recovery has gained traction since late 2012.
This third round of quantitative easing has been dubbed QE3. With the possibility of the economy picking up and stoking inflation, the Fed's huge holdings of bonds complicates future efforts to reduce them in a timely manner.
"The market probably expects Bernanke to be hawkish. The risk is that the Fed might end QE3 before the end of the year, even though it's unlikely,'' Lantz said.
Benchmark U.S. yields climbed to 8-month highs near 2 percent in the first week of 2013 after minutes of the Fed's December meeting showed several policymakers wanted to scale back its purchases of Treasurys and mortgage-backed securities before year-end.
But worries about the debt ceiling fight in Washington and disappointing company earnings have revived the appetite for Treasurys.
Benchmark U.S. 10-year Treasury notes were last up 2/32 in price, their yield at 1.859 percent after touching a low of 1.831 percent earlier. The 10-year yield ended at 1.866 percent on Friday. The 30-year bond was last 2/32 lower in price to yield 3.051 percent.
On Wall Street, the three major stock indexes were narrowly mixed in late trading, paring their early losses.
When the U.S. stock market closes at 4 p.m., Bernanke was scheduled to speak about monetary policy at an event at the University of Michigan.
Earlier, Chicago Fed President Charles Evans said the U.S. economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014. Speaking at the Asian Financial Forum in Hong Kong, Evans forecast the U.S. unemployment rate would be 7.4 percent this year, and about 7 percent in 2014.
Atlanta Fed chief Dennis Lockhart said later in a separate event that the Fed's open-ended bond purchases are not ``without bound,'' adding that QE3 is not "QE Infinity.''