U.S. Treasury debt prices rose on Monday, recouping some recent losses on anticipation that Federal Reserve Chair Janet Yellen could take a dovish tone on monetary policy this week, while weaker U.S. economic data also boosted safe-haven debt.
Yellen will testify before Congress on Tuesday in a semiannual address on the economy and monetary policy to the Senate Banking Committee.
Traders bought back some Treasurys, which have sold off over the past three weeks, on the risk that Yellen's testimony would proceed in the dovish vein of the minutes from the Fed's last meeting. The minutes showed policymakers were concerned about raising rates too soon.
"We did have a pretty meaningful sell-off," said Jonathan Lewis, chief investment officer at New York-based Samson Capital Advisors. "Today's move on the long end feels a little bit like position-squaring in front of a major event," he said in reference to Yellen's testimony.
While prices on 30-year bonds rallied the most and posted their best day since late January, prices on shorter-and intermediate-dated notes also gained. Yields on 30-year bonds, which move inversely to prices, fell the most and notched their biggest daily decline since late January. They hit a nearly one-week low of 2.65 percent. Shorter-dated bond yields also fell.
Data showing existing home sales fell sharply to the lowest level in nine months in January also supported Treasurys prices.
"Housing seems to be hitting some sort of a road block," said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch in New York. She also noted last week's data showing a decline in U.S. housing starts in January.
Analysts said a decline in oil prices supported safe-haven bond prices by fueling worries of deflation, while higher U.S. yields compared with German Bund yields remained a reason to buy Treasurys.
U.S. 30-year Treasurys were last up 1-17/32 in price to yield 2.66 percent, from a yield of 2.74 percent late Friday. Benchmark 10-year notes were last up 21/32 in price to yield 2.06 percent, from a yield of 2.13 percent late Friday.
U.S. three-year notes were up 3/32 in price to yield 1.03 percent, from a yield of 1.07 percent late Friday.
On Wall Street, U.S. stocks eased after the Dow and S&P closed at records last week. The benchmark S&P 500 stock index slipped 0.03 percent.