Bonds

Treasury yields are slightly lower to begin shortened holiday week

Treasury prices were higher and yields lower on Monday to start a shortened holiday week as investors continue to monitor developments on a U.S.-China trade deal.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 1.762%, while the yield on the 30-year Treasury bond was also higher at around 2.204%.

Treasurys

"With overnight volumes at half the norm, it isn't a stretch to suggest any price action over the coming days will lack the conviction needed for a durable repricing," Ian Lyngen, head of U.S. rates at BMO, said in a note on Monday.

The bond market is closed on Thursday and has an early close at 2 p.m. ET on Friday.

China announced on Sunday new guidelines aimed at stopping intellectual property theft, which is seen as the latest positive signal for trade talks.

Meanwhile, U.S. national security advisor Robert O'Brien said on Saturday that a phase one trade deal with China could happen before the end of the year. He also cautioned, however, that President Donald Trump would not ignore ongoing protests in Hong Kong.

Last week, both chambers of Congress passed a pro-Hong Kong rights bill by near unanimous margins amid crackdowns on protests. Trump said Friday he will take "a good look" at the bill.

The Treasury Department auctioned $40 billion in 2-year notes at a high yield of 1.601%. The bid-to-cover ratio, an indicator of demand, was 2.63. Indirect bidders, which include major central banks, were awarded 47.8%. Direct bidders, which includes domestic money managers, bought 29.1%.