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US bond yields dip after Fedspeak, note sale

U.S. government debt prices were mostly higher on Monday, as investors digested comments from Federal Reserve Governor Lael Brainard and the results of the Treasury Department's sale of 10-year and 3-year notes.

In prepared remarks to the Chicago Council on Global Affairs, Brainard said "the case to tighten policy preemptively is less compelling." Yields on U.S. Treasurys briefly dipped following her remarks.

The yield on the benchmark 10-year Treasury note last sat lower at around 1.6707 percent, while the yield on the 30-year Treasury bond was slightly higher at 2.3961 percent. Bond yields move inversely to prices.

The German 10-year bund yield hit a session high of 0.058 percent, its highest level since June 23. It has since pared some of those gains and was last sitting near 0.034 percent.

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%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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Earlier on Monday, Treasury Department auctioned $20 billion in 10-year notes at a high yield of 1.699 percent. The bid-to-cover ratio, an indicator of demand, was 2.35, below a recent average of 2.59.

Indirect bidders, which include major central banks, were awarded 62.1 percent, below a recent average of 65 percent. Direct bidders, which includes domestic money managers, bought 3.4 percent, well below a recent average of 11 percent.

The Treasury Department also auctioned $24 billion in 3-year notes at a high yield of 0.947 percent. The bid-to-cover ratio, an indicator of demand, was 2.77, below a recent average of 2.85.

Indirect bidders, which include major central banks, were awarded 54.8 percent. Direct bidders, which includes domestic money managers, bought 4.7 percent, its weakest level since Dec. 2009.

Atlanta Fed President Dennis Lockhart delivered a speech in which he said a "serious discussion" on raising rates is warranted at the central bank's upcoming meeting.

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On Friday, U.S. markets closed sharply lower, with all three major indexes posting their worst day since June 24, 2016, when the U.K. voted to leave the European Union.

The sharp plunge in U.S. equities on Friday however was due to concerns that the U.S. central bank could raise interest rates as soon as this month, following comments made by key Fed officials.

Boston Fed President Eric Rosengren said in a speech that low interest rates are increasing the chance of overheating the U.S. economy. Gradually tightening monetary policy is appropriate to maintaining full employment, he added.

The poor performance from U.S. markets on Friday added pressure to markets across the world, with both Asia-Pacific indexes and European markets tumbling on Monday due to Fed jitters.

U.S. markets rose on Monday as investors wondered when the Federal Reserve will raise its benchmark federal funds rate.

No major economic data is expected to be released on Monday.

CNBC's Fred Imbert and Gina Francolla contributed to this report.

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