U.S. Treasury yields fell to their lowest levels since November on Monday after a report showed that U.S. manufacturing grew at a substantially slower pace in January.
New order growth plunged by the most in 33 years, driving overall factory activity to an eight-month low. The report sent Treasury prices back into positive territory, after the bonds had earlier weakened on solid European growth and some calming in emerging market assets.
"Overall this is a weak number and it does suggest some dramatic slowing in economic activity," said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities in New York.
"One can put most of this down to the unseasonably cold weather that we've had over the past two months, we've seen that in other economic reports. The big question is whether that proves to be temporary and we think that it will," he said.
Treasury yields had earlier edged up after data showed that manufacturers around the world enjoyed a solid start to the year as order books swelled, though a struggle for growth in China and a downturn in France took the shine off the overall picture.
Data earlier on Monday also showed that U.S. manufacturing grew less briskly in January after hitting an 11-month high the prior month as output and overseas demand slowed.
Ten-year notes were last up 17/32 in price to yield 2.591 percent, the lowest since early November.
Benchmark 10-year yields have fallen as volatility in emerging markets that some blame on the U.S. Federal Reserve's attempts to reduce stimulus lead investors to seek the safety of U.S. bonds.
Monday's weak manufacturing report sent yields still lower as investors weigh whether weakening data may lead the Fed to slow or pause its reduction in its monthly bond purchases.
The Fed is not due to meet next until March, which will give it time to evaluate whether recent weakness is weather-related. The U.S. central bank last week cut its monthly asset purchases by $10 billion to $65 billion.
The next main focus for investors will be Friday's highly anticipated employment report for January. The Treasuries rally has also been helped by purchases by investors rebalancing portfolios for month-end, and by short-covering by investors who had positioned for higher yields.
The Fed will buy Treasuries every day this week as part of its ongoing purchases, including two separate operations on Wednesday. On Monday the Fed bought $1.25 billion in bonds due 2038 and 2043.