U.S. government debt prices traded mostly higher on Monday, as investors digested weaker-than-expected economic data and the first of three major note sales.
The Treasury Department auctioned $26 billion in two-year notes at a high yield of 1.348 percent, the highest since October 2008.
The bid-to-cover ratio, an indicator of demand, was 3.03, the highest since November 2015.
Indirect bidders, which include major central banks, were awarded 56.6 percent, above a recent average of 45 percent. Direct bidders, which includes domestic money managers, bought 18.3 percent, the largest since February.
"At least measured by this auction, the buyers are really doubting the path of many more rate hikes from the Fed," said Peter Boockvar, chief market analyst at The Lindsey Group. "We all debate this everyday about the mixed messages from the different markets but the Treasury market is speaking loudly about its view on growth and inflation."
The two-year note yield slipped to 1.336 percent following the sale; it traded around 1.34 percent beforehand.
The yield on the benchmark 10-year Treasury note sat lower at around 2.137 percent at 3:12 p.m. ET, while the yield on the 30-year Treasury bond was down at 2.696 percent. The 30-year yield also hit its lowest level since Nov. 9. Bond yields move inversely to prices.
On the data front, durable goods orders fell 1.1 percent in May, more than the expected 0.6 percent decline. The Dallas Fed manufacturing production index fell to 12.3 in June from 23.3 in May.
Elsewhere, at a seminar at the University of Technology Sydney, San Francisco Fed President John Williams told an audience that the U.S. Federal Reserve needed to keep increasing rates gradually to keep the economy stable, as if the Fed delays too long, the "economy will eventually overheat", according to Reuters.
"Gradually raising interest rates to bring monetary policy back to normal helps us keep the economy growing at a rate that can be sustained for a longer time," said Williams in Australia.
In politics, the U.S. President Donald Trump is set to meet with the Prime Minister of India, Narendra Modi at the White House on Monday, with topics such as fighting terrorism and promoting economic growth expected to be up for discussion.
In the commodities space, oil prices posted solid gains on Monday, on the back of a weaker dollar, however glut concerns continued to weigh on sentiment.