U.S. sovereign bonds rose on Monday, following better-than-expected U.S. durable goods orders and a sell-off in global stock markets and commodities lifted demand for safe-haven assets.
Durable goods orders for June rose 3.4 percent with economists expecting them to increase 3 percent.
"Bottom line, putting aside the volatile headline figure which was boosted by aircraft orders, non defense capital goods ex aircraft, otherwise known as core cap ex, rebounded in June from May but the absolute level of spend is still below where it was in March and is still down 5.2% y/o/y," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.
Still, any gains in the bond market were likely to be tempered ahead of a two-day U.S. Federal Reserve meeting that kicks off on Tuesday and could shed light on whether the central bank is getting ready to hike rates in September as many expect.
Investors will also eye the June flash purchasing managers' index (PMI) for the services sector on Tuesday for clues about the U.S. economic outlook.
The yield on the benchmark 10-year Treasury notes was at 2.2283 percent, down 4.5 basis points on the day. When a bond's yield falls, its price rises.
Yield on five-year notes were down 5.3 basis points at 1.5703 percent, while 30-year yields fell 2.8 basis points to 2.9429 percent.
European and Asian stock markets tumbled on Monday, while commodity prices sold off again amid worries about China's economy after stock markets in Shanghai suffered their biggest drop in eight years.
U.S. stocks traded lower across the board on Monday.
"Although the U.S. data calendar gets busier over the coming week (including the Fed meeting on Wednesday), the focus for now remains on the commodity/EM (emerging market) bloc," analysts at Societe General said in a note.
"The equity complex also looks wobbly, with Asian indices starting the week on the wrong foot. That will help bonds start the week with a positive spin," they said.
Correction: An earlier version of this article stated that the June flash purchasing managers' index (PMI) for the services sector was due at 09:45 a.m. ET on Monday. It is scheduled for release on Tuesday.