* Record highs on Wall Street restrain gains for safe-haven debt
* Lightest buyside demand for 3-month bill auction since July
* Three-month bills to mature after Feb. 7 debt ceiling mark
* Retail sales, consumer price, home sales data due on Wednesday
NEW YORK, Nov 18 (Reuters) - U.S. Treasuries prices rose on Monday on expectations the Federal Reserve will continue its bond-buying program under new head Janet Yellen, though comments from another Fed speaker underscored the crossroads facing the central bank.
Investors also shied away from riskier assets as the session wore on after activist investor Carl Icahn told Reuters he is "very cautious" on equities and that the market could easily have a "big drop."
Markets see current Fed Vice Chair Janet Yellen as dovish. She is expected to take the chairmanship from Ben Bernanke early next year.
Answering questions before the Senate Banking Committee last week, Yellen made plain she would press forward with the Fed's ultra-easy monetary policy until officials were confident a durable economic recovery was in place that could sustain job creation.
Those comments continue to reverberate in markets, said Kevin Giddis, head of fixed income capital markets head at Raymond James.
The U.S. Federal Reserve is currently buying $85 billion per month in Treasuries and mortgage-backed securities. The timing of when the Fed might pull back, or taper, those purchases has become a central question for markets.
Policymakers have made it clear they want to see a strong, sustainable recovery in the job market before they pare purchases, but when that recovery might come is hard to say.
William Dudley, an influential U.S. central banker who has been one of the staunchest supporters of easy-money policies, on Monday said he was "getting more hopeful" on prospects for the beleaguered U.S. economic recovery.
While he did say "very accommodative" monetary policy will likely be in place "for a considerable period of time," his comments suggested the Fed as a whole could be approaching a slowdown in the so-called quantitative easing program.
THREE-MONTH TREASURY BILL AUCTION
The Treasury's weekly sales of three- and six-month bills resulted in the lightest buyside demand since July for three-month bills, said Stone & McCarthy Research Associates analyst Cathy Guo.
The six-month bills drew a better bid than the three-month bills.
"The maturity date of the three-month bills in late February may have something to do with it, but investors will be cautious with front-end investments around the time that the debt ceiling is reinstated," said Thomas Simons, vice president and money market economist at Jefferies in New York.
As of now, the Treasury is allowed to issue as much debt as needed through Feb. 7. At that point, Congress must raise the debt limit to let the Treasury increase the total amount of official borrowing.
The benchmark 10-year Treasury note rose 13/32 in price to yield 2.662 percent, compared to 2.7070 percent late on Friday.
The 30-year bond rose 27/32 in price to yield 3.753 percent, compared to 3.7990 percent late on Friday.
Absent fresh economic data, there was little besides the backdrop of monetary accommodation and the lure of riskier assets to guide the U.S. Treasury market on Monday.
Wednesday is the first day of the week offering a significant slate of fresh economic data. Figures on October retail sales, consumer prices, and home sales are due that day, as well as minutes about the most recent U.S. Federal Reserve policymaking meeting.
"Wednesday is when the fireworks could begin: Retail sales, the consumer price index, existing home sales and minutes from the October 29-30 Fed policy meeting could make trading U.S. government securities quite interesting," Giddis said.