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US Treasury yields lower after sale

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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U.S. sovereign bond prices gained Monday as investors digested fresh supply and looked ahead to a speech by Federal Reserve chair Janet Yellen for further clues on the timetable for future U.S. interest rate movements.

The Treasury Department auctioned $26 billion in two-year notes at a high yield of 0.877 percent.

The bid-to-cover ratio, an indicator of demand, was 2.58, the lowest since December 2008.

Indirect bidders, which include major central banks, were awarded 47.4 percent, slightly below a recent average of 48 percent. Direct bidders, which include domestic money managers, bought 15.2 percent, marginally above a recent average of 15 percent.

Investors also digested news of reported gunshots near the U.S. Capitol.

"The reaction was pretty muted … there was a pretty significant back up going into that news and then it bounced after the news," said Tom Simons, money market economist at Jefferies. He said the bond market has been chopping around on it. "I think that's characteristic of the light volume we had today… the S&P's bounced back to where they were. They're brushing it off for now."

The price for 10-year Treasury notes was up slightly, while the yield, which moves inversely to price, was down at 1.8799 percent.

Meanwhile the 30-year bond's yield was also down at 2.6544 percent. Two-year note yields were also lower, trading at 0.8691 percent.

Yields were trading higher earlier in the session.

Tuesday sees Fed Chair Janet Yellen speaking on economic and monetary policy and investors will be parsing her speech for more clues on how many rate hikes the Open Markets Committee are looking at and when.

Her remarks will follow those made by St. Louis Fed President James Bullard in a speech last week where he stated another U.S. interest rate hike "may not be far off."

On the data front, the PCE Price Index dipped 0.1 percent last month, after gaining 0.1 percent in January. Personal spending in the U.S. gained marginally in February, while spending for January was revised down to a gain of 0.1 percent, from an increase of 0.5 percent.

Pending home sales hit a seven-month high in February, rising 3.5 percent.

Markets in Europe were closed for a public holiday while, in Asia, Japan's benchmark Nikkei 225 closed up 0.77 percent.

— CNBC's Patti Domm contributed to this report.