Treasury bonds rose Monday as investors fled the stock market amid growing concerns about the financial sector. A Federal Reserve official warned that financial companies' problems might worsen, and a Wall Street analyst raised questions about government lenders Freddie Mac and Fannie Mae.

Investors had moved money back into stocks in early trading, but rushed back into Treasurys after media reports quoted San Francisco Federal Reserve President Janet Yellen as saying problems in the housing market and banking system could get even worse before the economy recovers

The prospect of prolonged economic problems was enough to send anxious investors into the relative safety of government debt. Treasury prices have notched higher this year because of a steep drop in stock valuations _ the Dow Jones industrial average and Standard & Poor's 500 index are both down about 14 percent in 2008.

In addition, Lehman Brothers analysts said in a note that Fannie Mae and Freddie Mac might need more capital as the aftermath of the credit crisis continues. Lehman said new accounting rules could require Fannie Mae to raise $46 billion more capital and Freddie to raise $29 billion.

Tom di Galoma, head of Treasurys trading at Jefferies & Co., said he believes Treasury prices will move sharply higher as banks and brokerages report more losses due to the credit crisis.

"I think you'll see a reinvestment back into the safe haven bid in Treasurys if (the financials) continue to grind lower," he said. "These stocks have lagged the rest of the market, and that shows there's still much concern out there."

In late trading, the 10-year note rose 20/32 to 99 23/32. Its yield fell to 3.91 percent from 3.98 percent on Thursday, according to BGCantor Market Data. Yields usually move in the opposite direction from prices.

The 30-year long bond rose 23/32 to 98 3/32. Its yield fell to 4.50 percent from Thursday's 4.54 percent.

The 2-year note rose 6/32 to 100 26/32, and yielded 2.44 percent, down from 2.54 percent.

The 3-month Treasury bill's yield rose to 1.85 percent from 1.83 percent on Thursday, and the discount rate rose to 1.83 percent from 1.81 percent.

There was no economic data to guide investors during the session. However, reports on existing homes, unemployment and consumer sentiment are scheduled for the coming days.

The market will also get its first glimpse of second-quarter results. Both Alcoa Inc. and General Electric Co. are on tap to post earnings this week.