NEW YORK: US Treasury debt prices rose on Monday as investors sought the safety of government bonds as global equities fell on factors including news on Deutsche Bank that dragged its shares to record lows.
Long-dated yields, which move inversely to prices, fell to three-week lows, while two-year note yields slid to two-week troughs.
The German bank has been fighting a $14-billion demand from the US Department of Justice to settle a mortgage mis-selling case.
"Today's bullish tone in Treasuries is largely the result of the risk-off sentiment in global equities," said Gennadiy Goldberg, interest rates strategist at TD Securities in New York.
"It basically started with the Deutsche Bank news, which soured sentiment globally."
Stock market indexes around the world also declined amid caution ahead of the first US presidential debate between Hillary Clinton and Donald Trump. German magazine Focus reported over the weekend that Chancellor Angela Merkel had met Deutsche Bank Chief Executive John Cryan over the summer and had indicated he could expect no help from Berlin in resolving the bank's dispute with the US Department of Justice.
Merkel had also ruled out state aid to Deutsche Bank, the magazine said, citing government sources. Germany's biggest lender, however, said on Monday it did not require assistance from Berlin and had not requested it.
In mid-morning trading, US benchmark 10-year Treasury notes were up 6/32 in price for a yield of 1.592 percent, down from 1.615 percent late on Friday. Earlier on Monday, yields fell to 1.591 percent, a three-week low.
TD's Goldberg said yields also edged lower after the Federal Reserve's dovish stance last week, when it kept interest rates unchanged following its most recent monetary policy meeting.
US 10-year yields briefly rose above 1.6 percent after data showed new US single-family home sales fell less than expected in August even as prices fell and inventories rose.
US new home sales fell 7.6 percent to a seasonally adjusted annual rate of 609,000 units last month. Sales were up 20.6 percent from a year ago. Economists polled by Reuters had forecast single-family home sales, which account for roughly 10 percent of all home sales, to fall to a rate of 600,000 units last month.
US 30-year bond prices rose 10/32 in price, yielding 2.323 percent, down from last Friday's 2.339 percent. Yields earlier slid to a three-week low of 2.321 percent.
On the front-end of the curve, US two-year notes were flat in price for a yield of 0.741 percent, down from 0.754 percent late on Friday. Earlier, yields touched a two-week trough of 0.738 percent.
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