U.S. Treasury notes and bonds traded higher on Monday, on the first trading session of 2016, as investors focused on geopolitics in the Middle East and a sharp sell-off in Chinese equities.
Yields (which have an inverse relationship with prices) on 10-year U.S. Treasurys fell to their lowest levels in a week Monday morning before reversing slightly to 2.2383 percent, from a previous close of 2.275 percent. The U.S. two-year yield hit lows of 0.992 percent and the U.S. five-year hit lows of 1.6958 percent.
Feeble manufacturing surveys in China revived concerns over the slowdown in the world's second largest economy. Fresh manufacturing PMIs on Monday showed a fall to 48.2 in December, from 48.6 in November, contracting for a tenth month and coming in below a Reuters poll forecast for 49.0.
The distinctly risk-off mood was highlighted as the Shenzhen Composite had its worst day since early 2007, closing down 8.2 percent. The Shanghai Composite ended 6.86 percent and trading on both exchanges was temporarily halted as the authorities implemented a "circuit breaker" for the first time.