Bonds rose on Monday after the U.S. government's auction of three-year Treasury notes, the first of three debt auctions this week.
The Treasury Department auctioned $24 billion in three-year notes at a high yield of 0.926 percent, the lowest since August.
In the when-issued market, traders had expected the reopening of the three-year issue introduced in November to fetch a yield of 0.9440 percent. This compared with a yield of 1.066 percent in December.
The bid-to-cover ratio, an indicator of demand, was the best since October at 3.33.
The 10-year benchmark Treasury note extended earlier gains after the auction. It was last up 9/32 in price with the yield at 1.92 percent, compared with 1.969 percent on Friday.
U.S. Treasurys yields fell earlier with benchmark yields stuck below 2 percent as a renewed decline in oil prices and worries about Europe spurred a wave of safe-haven buying ahead of an auction of three-year government notes.