U.S. Treasury debt prices fell on Monday, although benchmark yields were still near their lowest since April, on increased risk appetite spurred by weak employment and services sector data and increasing doubts the Federal Reserve will raise interest rates by year-end.
Skepticism about a rate increase rekindled appetite for stocks among investors worried that higher U.S. borrowing costs would hurt corporate profits, analysts said.
"Last week's employment data suggested labor gains were slowing, knocking down the one pillar the Fed's been leaning on, and if employment is weaker, it's harder for the Fed to move, so risk appetite is higher," said Aaron Kohli, interest rates strategist at BMO Capital Markets in New York.
Treasuys trimmed earlier losses as a steeper-than-forecast drop in a private index of the U.S. services sector in September revived bets the economy is not strong enough for the Fed to boost rates in the near term.
The Institute for Supply Management said its gauge of U.S. services industries fell to 56.9 percent, its lowest since June and down from 59.0 in August. Analysts polled by Reuters had forecast a fall to 57.5.
The ISM data follows Friday's disappointing U.S. employment report, which showed employers hired 142,000 people in September, far fewer than the 203,000 expected.
Analysts expect the data may lead to a change of view among some Fed policymakers who have said the U.S. central bank would end its near-zero rate policy if the economy improves further.
Interest rate futures implied traders scaled back their bets on a rate increase by year-end. They now see such a move in March 2016 at the earliest.
Expectations the Fed might refrain from raising rates this year will likely boost demand for this week's coupon debt supply.
The U.S. Treasury Department will sell $24 billion in three-year notes, $21 billion in 10-year debt and $13 billion in 30-year bonds this week.
On the open market, benchmark 10-year Treasuys were down 18/32 in price to yield 2.06 percent, up more than 6 basis points from late Friday. The 10-year yield touched 1.904 percent on Friday, which was its lowest since late April, according to Reuters data.
The 30-year bond was down 1-15/32 in price to yield 2.90 percent, up 7 basis points from Friday.