US Treasury yields fell on Monday, holding just above almost three-year lows, ahead of trade talks between the US and China later this week. Investors are focused on whether US President Donald Trump and Chinese President Xi Jinping can de-escalate the trade war between the two countries when they meet at the G20 summit in Japan.
Tariffs between the two counties have been blamed for slowing international growth, prompting global central banks to signal a readiness to adopt looser policies.
"That's one of the biggest uncertainties in the market right now, and has an effect on data and growth," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.
Benchmark 10-year notes were last up 11/32 in price to yield 2.028 percent, down from 2.066 percent on Friday.
Yields fell to their lowest level since November 2016 on Thursday, a day after the Federal Reserve signaled it could cut interest rates as early as July to battle growing global and domestic economic risks.
Interest rate futures traders are pricing in a 57 percent chance of a 25-basis-point cut in July, and a 43 percent chance of a 50-basis-point cut, according to the CME Group's FedWatch tool.
Rising tensions between the United States and Iran have also boosted safe-haven buying of US debt. Trump imposed new US sanctions on Iran on Monday following Tehran's downing of an unmanned American drone and said the measures would target Iranian Supreme Leader Ayatollah Ali Khamenei.
Demand for bonds from investors' rebalancing accounts for quarter-end is also expected this week.
The Treasury Department will sell $113 billion in coupon-bearing supply this week, including $40 billion in two-year notes on Tuesday, $41 billion in five-year notes on Wednesday and $32 billion in seven-year notes on Thursday.
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