U.S. Treasurys were firm on Monday with benchmark 10-year note yields holding near four-month lows as investors focused on a heavy calendar of central bank meetings and highly anticipated jobs data scheduled for later this week.
Trading volumes were light ahead of the releases, which will start with a statement from the Federal Reserve's two-day meeting on Wednesday that some expect may adopt a more dovish tone in response to recent data that shows slowing growth.
The European Central Bank is also expected to cut the main euro zone interest rates at its monthly meeting by 25 basis points on Thursday to 0.50 percent as the bloc's economy weakens further.
On Friday the U.S. government announces non-farm payrolls data for April, which is likely to show employers added 145,000 jobs, according to the median estimate of economists polled by Reuters. The data will be scoured for any signs of weakness after March's number came in well below expectations, at 88,000.
"It seems like the market is waiting for things to kick in on Wednesday. It has priced in some pretty weak economic data going forward," said Jason Rogan, managing director of Treasurys trading at Guggenheim Partners in New York.
Disappointing data including slower-than-expected U.S. economic growth in the first quarter has led Treasurys yields lower in the past few weeks, as investors again grapple with the prospect that the economy will at best only muddle along this year.
A report on Monday that showed little inflation in March also raised some concerns that Fed will need to continue its bond purchase program for longer to battle the risk of deflation. Over the past 12 months, inflation has risen just 1 percent, the smallest gain since October 2009.
"The Fed may be singing a different tune than the last meeting, and those who were wanting the Fed to stop buying (bonds) have become very quiet," said Kevin Giddis, senior managing director and head of fixed income capital markets at Raymond James.
Benchmark 10-year notes were flat in price to yield 1.67 percent, near their lowest levels since December. The yields have dropped from as high as 2.05 percent on March 8.
The Treasury will also announce its refunding plans for the second quarter on Wednesday, which will be watched for any cuts in its planned issuance as the government benefits from strong tax receipts.
The Treasury has been cutting sales of Treasury bills on the better tax inflows, and as another fight over the debt ceiling looms. The debt ceiling has been suspended until May 18, when Republicans are expected to use the ceiling as a tool to push for new spending cuts.
The Treasury on Monday said it will sell $30 billion in four-week Treasurys bills on Tuesday, $10 billion less than the last week and $5 billion less than most expected. This came on top of $9 billion in cuts in this week's three-month, six-month and 12-month bill auctions, which were announced last week.
The declining bill issuance has helped short-dated bill yields drop and some think declining supply could also extend to extra demand for coupon debt.
The Fed will buy between $4.25 billion and $5.25 billion in notes due 2017 on Tuesday as part of its ongoing bond purchase program. It purchased $1.52 billion in bonds due 2036 and 2042 on Monday.